Baba Batteries Services ... vs The State Of Madhya Pradesh
2022 Latest Caselaw 7723 MP

                          1

     IN THE HIGH COURT OF MADHYA PRADESH
                  AT GWALIOR

                      BEFORE

 HON'BLE SHRI JUSTICE GURPAL SINGH AHLUWALIA

              ON THE 14th OF JUNE, 2022

          WRIT PETITION No. 10634 of 2022

  Between:-

  BABA    BATTERIES   SERVICES
  (PROPRIETARY FIRM) THROUGH
  ITS    PROPRIETOR     NARESH
  AGARWAL    S/O   LATE   SHRI
  HARCHARAN LAL, AGED : 58
  YEARS,     OCCUPATION       :
  CONTRACTORSHIP, R/O NEAR
  ACHARAN PRESS, IN FRONT OF
  LOK PLAZA SHOWROOM, MANIK
  PLAZA, JINSI NALA NO. 1,
  LASHKAR, GWALIOR (MADHYA
  PRADESH)

                                      ........PETITIONER

  (BY SHRI S.K.S. JADON - ADVOCATE)

  AND

1. STATE OF MADHYA PRADESH
   THROUGH           PRINCIPAL
   SECRETARY,           URBAN
   ADMINISTRATION            &
   DEVELOPMENT    DEPARTMENT,
   MANTRALAYA,    GOVT.     OF
   MADHYA PRADESH, VALLABH
                                            2

       BHAWAN,            BHOPAL           (MADHYA
       PRADESH)

   2. THE MUNICIPAL CORPORATION,
      GWALIOR (MADHYA PRADESH)
      THROUGH ITS COMMISSIONER

   3. THE    ACCOUNTS    OFFICER,
      MUNICIPAL      CORPORATION,
      GWALIOR (M.P.)

                                                           ........RESPONDENTS

        (BY SHRI DEVENDRA CHAUBEY - GOVERNMENT
ADVOCATE)
----------------------------------------------------------------------------------------
       This petition coming on for hearing this day, the Court passed the
following:
                                      ORDER

This petition under Article 226 of the Constitution of India has been filed seeking the following relief:-

"i) That, the respondents be commanded to taking cognizance over his representations (Annexure - P/6) settle admitted clam of the petitioner to the tune of Rs.5,16,856/- (i.e. bill amount of Rs.2,66,856/- plus EMD Rs.2,50,000/- deposited with Municipal Corporation, Gwalior) and the respondents be further commanded to pay the same along with 12% p.a. Within a stipulated time period, in the interest of justice.

ii) Cost of the petition be awarded or any other order or direction deemed fit in the circumstances of the case be issued in the favour of the petitioner."

It is submitted by the counsel for the petitioner that the petitioner was wanting a tender for supply of certain goods. Since the bid of the petitioner was the lowest, therefore, the same was accepted and the

petitioner has performed his part of contract and has submitted a bill of Rs.2,66,856/- to the Municipal Corporation, Gwalior on 12.07.2018. The said bill has not been cleared and the amount of Rs.2,66,856/- has not been paid in spite of the various representations as well as legal notice.

Per contra, the petition is vehemently opposed by the counsel for the State. It is well established principle of law that unless and until, the respondents admit their liability, the writ petition for enforcement of contractual liability is not maintainable. There is nothing in the writ petition to show that the respondents had admitted their liability. Various disputed questions of facts are involved, therefore, it is submitted that the writ petition filed by the petitioner is not an efficacious remedy and petitioner can file a civil suit for enforcement of the contractual liability.

Heard the learned counsel for the parties. The Supreme Court in the case of Divisional Forest Officer Vs. Bishwanath Tea Co. Ltd. reported in (1981) 3 SCC 238 has held as under:-

"8. It is undoubtedly true that High Court can entertain in its extraordinary jurisdiction a petition to issue any of the prerogative writs for any other purpose. But such writ can be issued where there is executive action unsupported by law or even in respect of a corporation there is a denial of equality before law or equal protection of law. The Corporation can also file a writ petition for enforcement of a right under a statute. As pointed out earlier, the respondent (company) was merely trying to enforce a contractual obligation. To clear the ground let it be stated that obligation to pay royally for timber cut and felled and removed is prescribed by the relevant regulations. The validity of regulations is not challenged. Therefore, the demand for royalty is unsupported by law.

What the respondent claims is an exception that in view of

a certain term in the indenture of lease, to wit, clause 2, the appellant is not entitled to demand and collect royalty from the respondent. This is nothing but enforcement of a term of a contract of lease. Hence, the question whether such contractual obligation can be enforced by the High Court in its writ jurisdiction.

9. Ordinarily, where a breach of contract is complained of, a party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specifically performed, or the party may sue for damages. Such a suit would ordinarily be cognizable by the civil court. The High Court in its extraordinary jurisdiction would not entertain a petition either for specific performance of contract or for recovering damages. A right to relief flowing from a contract has to be claimed in a civil court where a suit for specific performance of contract or for damages could be filed. This is so well-settled that no authority is needed. However, we may refer to a recent decision bearing on the subject. In Har Shankar v. Deputy Excise & Taxation Commissioner [(1975) 1 SCC 737 : AIR 1975 SC 1121 : (1975) 3 SCR 254] the petitioners offered their bids in the auctions held for granting licences for the sale of liquor. Subsequently, the petitioners moved to invalidate the auctions challenging the power of the Financial Commissioner to grant liquor licences. Rejecting this contention, Chandrachud, J. (as he then was), speaking for the Constitution Bench at p. 263 observed as under: (SCC p. 746, para 16) "Those who contract with open eyes must accept the burdens of the contract along with its benefits. The powers of the Financial Commissioner to grant liquor licences by auction and to collect licence fees through the medium of auctions cannot by writ petitions be questioned by those who, had their venture succeeded, would have relied upon those very powers to found a legal claim. Reciprocal rights and obligations arising out of contract do not depend for their enforceability upon whether a

contracting party finds it prudent to abide by the terms of the contract. By such a test no contract could ever have a binding force."

Again at p. 265 there is a pertinent observation which may be extracted: (SCC p.747, para 21) "Analysing the situation here, a concluded contract must be held to have come into existence between the parties. The appellants have displayed ingenuity in their search for invalidating circumstances but a writ petition is not an appropriate remedy for impeaching contractual obligations."

This apart, it also appears that in a later decision, the Assam High Court itself took an exactly opposite view in almost identical circumstances. In Woodcrafts Assam v. Chief Conservator of Forests [AIR 1971 Ass 92 : LR 1970 Ass 183] a writ petition was filed challenging the revision of rates of royalty for two different periods. Rejecting this petition as not maintainable, a Division Bench of the High Court held that the complaint of the petitioner is that there is violation of his rights under the contract and that such violation of contractual obligation cannot be remedied by a writ petition. That exactly is the position in the case before us. Therefore, the High Court was in error in entertaining the writ petition and it should have been dismissed at the threshold."

The Supreme Court in the case of Joshi Technologies International Inc. Vs. Union of India and others 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 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.

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."

The Supreme Court in the case of Municipal Corporation Gondia Vs. Divi Works and Suppliers, HUF and others by judgment dated 28.02.2022 passed in Civil Appeal No.1538/2022 has held that the writ petition for enforcement contractual obligation out of the contract of supply of goods and payment thereof is not maintainable and

the parties should resort to general remedies provided under Civil Law.

It is the case of the petitioner that it had supplied certain goods to the Municipal Corporation and had raised final bail dated 12.07.2018, but the same is still unpaid. There is nothing in the writ petition to show that the respondents had ever admitted their liability.

Since the various disputed questions of facts are involved, therefore, this Court is of the considered opinion that the writ petition for enforcement of contractual liability is not maintainable.

Accordingly, it is dismissed. However, liberty is granted to the petitioner to avail statutory remedy available to him. The liberty granted to the petitioner should be construed as a condonation of limitation if provided under the law.

(G.S. AHLUWALIA) JUDGE Abhi ABHISHEK CHATURVEDI 2022.06.16 20:07:42 +05'30'