Orissa High Court

M/S. Hirakud Industrial Works vs East Coast Railway on 9 May, 2025

Author: S.K. Panigrahi

Bench: S.K. Panigrahi

                                                               Signature Not Verified
                                                               Digitally Signed
                                                               Signed by: BHABAGRAHI JHANKAR
                                                               Reason: Authentication
                                                               Location: ORISSA HIGH COURT, CUTTACK
                                                               Date: 16-May-2025 15:56:18




                 IN THE HIGH COURT OF ORISSA AT CUTTACK
                              W.P.(C) No.14664 of 2022
       (In the matter of an application under Articles 226 and 227 of the
       Constitution of India, 1950).

       M/S. Hirakud Industrial Works         ....                    Petitioner(s)
       Limited
                                    -versus-
       East Coast Railway, represented       ....           Opposite Party (s)
       through its General Manager, East
       Coast Railway, Bhubaneswar &
       Ors.

     Advocates appeared in the case through Hybrid Mode:
       For Petitioner(s)           :           Mr. Krishnaraj Thaker, Sr. Adv.
                                                                  Along with
                                                Mr. Sahasransu Sourav, Adv.

       For Opposite Party (s)      :         Mr. Prasanna Kumar Parhi, DSGI
                                                    Mr. S.K. Samantray, CGC
                                                Mr. P. Chidambaram, Sr. Adv.
                                                                   along with
                                                      Mr. Ashish Prasad, Adv.
                                              Mr. Koushik Anand Guru, Adv.
                                                       Ms. Mukta Dutta, Adv.
                                                Mr. Debasish Mohapatra, Adv.

                 CORAM:
                 DR. JUSTICE S.K. PANIGRAHI

                      DATE OF HEARING:-25.02.2025
                     DATE OF JUDGMENT:-09.05.2025
     Dr. S.K. Panigrahi, J.

1. This Writ Petition is preferred by the Petitioner challenging the

legality and propriety of the actions of the Opp. Parties No. l and 2 in

Location: ORISSA HIGH COURT, CUTTACK

providing indent to the Opp. Party No.3 despite the termination of the

agreement between the Petitioner No l and the Opp. Party No.3 by

efflux of time in an illegal and arbitrary manner thereby jeopardizing

the interest of the Petitioners.

I. FACTUAL MATRIX OF THE CASE:

2. The Petitioner to start with was a wholly owned subsidiary of the

Industrial Development Corporation of Odisha Limited (IDCOL)

which after divesting of shares is presently an unlisted public

company.

3. The facts giving rise to the present Petition can be summarised as

under:

a. The Petitioner is the owner of about 16 kms of railway

tracks/ siding from Hirakud to Sambalpur as well as three

locomotives at its plant in Hirakud. The present lis is,

however, submitted to be confined to about 12 kms. of the

railway tracks.

b. The Petitioner entered into agreement dated 28.6.2002 for a

period of twenty years with the then Indian Aluminium

Company Limited (INDAL), now known as Hindalco

Industries Limited. Vide agreement dated 28.6.2002, the

Petitioner had allowed Hindalco to use approximately 12

kms. of the railway tracks and the three locomotives on a

lease basis. The agreement was to expire on 31.5.2022

contractually.

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c. The agreement contained a clause for renewal at the option

of Hindalco on mutually agreed terms and conditions,

including a primary condition that any request for extension

would be entertained only if it was intimated to the

Petitioner three months prior to the expiry of the lease

period. The agreement also specifies that upon efflux of time

and termination consequent thereto, Hindalco would hand

over peaceful possession of the leased premises to the

Petitioner.

d. While this Agreement was subsisting, the Petitioner entered

into a private siding agreement with East Coast Railways

vide Agreement dated 28.9.2005. This Agreement dated

28.9.2005 incorporated the Petitioner's subsisting Agreement

with Hindalco and granted Hindalco permission to co-use

the railways.

e. As the matter stood thus, the shares of the Petitioner

Company were divested and such action was challenged by

the workers union of the Petitioner Company along with

directions for payment of arrear and current salaries before

this Court in W.P.(C) No.l2479 of 2009 and W.P.(C) No.7939

of 2011. During the pendency of the aforesaid proceedings,

one M/S.Nandakini Contractors Private Limited - a financial

creditor instituted a petition under Section 7 of the

Insolvency and Bankruptcy Code, 2016 bearing C.P.(IB)

No.Ol/CTB/2019, before the National Company Law

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Tribunal, Cuttack Bench for initiation of Corporate

Insolvency Resolution Process against the Petitioner since it

had failed to pay its financial debt.

f. After a series of orders and proceedings before this Court

and NCLT, Cuttack, the matter finally came to a quietus vide

judgment dated 18.11.2019 of the Apex Court in Civil

Appeals No.8800-8801 of 2019 wherein the Apex Court had

directed that this Court ought not to proceed in the matter

when NCLT was in seisin of the matter and moratorium had

been ordered. As such, it was directed that IBC would

govern the proceedings.

g. In the terms of the orders of the Apex Court, the learned

NCLT, Cuttack vide its order dated 22.12.2021 was pleased

to dispose of the application under Section 7 filed by M/s

Nandakini, approving the resolution plan of one M/S.Regus

Impex Private Limited (hereinafter referred to as Regus). As

such, vide orders dated 22.12.2021 of the NCLT, Cuttack,

Regus took over the affairs of the Petitioner Company.

h. The said Regus having now stepped into the management of

the Petitioner Company, attempts were made to sort out all

of its affairs and noticing discrepancies in payments, letter

dated 14.1.2022 was sent to Hindalco seeking outstanding

dues to the tune of Rs.10,44,75,383.45 towards lease rental

and accrued interest thereon and Rs.8,96,305/- towards

supply of materials and stating inter alia that in case

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Hindalco wanted to continue with the agreement, it ought to

pay the outstanding dues. Having not received any notice

intimating interest in extending the lease Agreement, the

Petitioner vide letter dated 17.5.2022 once again sought

payment from Hindalco of the outstanding dues and stated

that in pursuance of the terms of the Agreement dated

28.6.2002, the Agreement was expiring on 31.5.2022.

i. It is pertinent to mention here that, Hindalco had also sought

to be a resolution applicant in the CIRP Proceedings before

the NCLT, Cuttack but failed in its attempt. Hindalco has

challenged the order dated 22.12.2021 of the NCLT, Cuttack

before NCLAT, New Delhi in Comp. App. (AT) (Ins) No.42

of 2022 where the NCLAT vide its order dated 17.1.2022

although it has not stayed the order dated 22.12.2021 of the

NCLT, Cuttack but has directed that no further disbursement

is to be made in pursuance of the impugned order approving

the resolution plan and further directing that status quo

would be maintained by the parties regarding the assets.

j. With this background, it is alleged that instead of

approaching the Petitioner with whom East Coast Railway

had entered into the private siding agreement dated

28.9.2005, East Coast Railways vide letter dated 2.3.2022

sought information from Hindalco as to what is the status of

the Petitioner Company's and Hindalco's relationship was

post 31.5.2022 given that the Agreement between the

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Petitioner Company and Hindalco was due to expire on

31.5.2022.

k. Hindalco vide its letter dated 22.3.2022 has replied to the

East Coast Railway's letter dated 2.3.2022 stating that the

learned NCLAT, New Delhi has directed maintenance of

status quo as regards disbursement pursuant to the

Resolution Plan approved by the NCLT, Cuttack as well as

with respect to the assets of the Petitioner Company. It then

went on to request the East Coast Railways to permit it to

use the private siding after 31.5.2022 (expiry of lease) until

final disposal of the proceedings before the NCLAT.

4. The Petitioner Company is aggrieved that despite the expiry of the

lease Agreement dated 28.6.2002 on 31.5.2022, East Coast Railway is

permitting Hindalco to use the private rail tracks and locomotives in

an absolute illegal and arbitrary manner prejudicing the interest of the

Petitioner. The Petitioner submits that despite making multiple

representations dated 31.5.2022 and 2.6.2022 before the East Coast

Railways, the East Coast Railways has continued to permit Hindalco

to use the private rail tracks and locomotives belonging to the

Petitioner. Against this arbitrary and illegal actions, the instant

Petition has been preferred. As the facts leading to the instant Petition

have been laid down, this Court shall endeavour to summarise the

contentions of the Parties and the broad grounds that have been

raised to seek the exercise of this Court's writ jurisdiction.

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II. PETITIONER'S SUBMISSIONS:

5. The Ld. Sr. Counsel Mr. Krishnaraj Thaker for the Petitioner submits

that the objection taken that the relief of the Petitioner Company lies

in arbitration proceedings and not by way of a writ petition is devoid

of substance on account of the various decisions of the Supreme Court

holding that an alternate remedy did not place any fetters on the

powers of the High Court under Article 226 of the Constitution. In

support of his aforesaid submissions, the Ld. Sr. Counsel relied on

and referred to the decision of the Supreme Court in Harbanslal

Sahnia v. Indian Oil Corpn. Ltd.1, wherein the Court observed that

the rule of exclusion of writ jurisdiction by availability of an

alternative remedy, was a rule of discretion and not one of

compulsion and there could be contingencies in which the High Court

exercised its jurisdiction in spite of availability of an alternative

remedy.

6. Ld. Sr. Counsel also relied on the Supreme Court's judgment in

Modern Steel Industries v. State of U.P.2, wherein on the same point

the Court had held that the High Court ought not to have dismissed

the writ petition requiring the appellant therein to take recourse to

arbitration proceedings, particularly when the vires of a statutory

provision was not in issue. Reference was also made to the decisions

of the Supreme Court in Whirlpool Corpn. v. Registrar of Trade

(2003) 2 SCC 107

(2001) 10 SCC 491

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Marks3; NSSO v. Champa Properties Ltd.4 and Hindustan Petroleum

Corpn. Ltd. v. Super Highway Services5, where similar views had been

expressed.

7. Moreover, it is submitted on merits that the acts of the Respondent

No. 1 in permitting Respondent No. 3 to use the private siding of the

Petitioner by accepting the indents placed by Respondent No. 3 and

supplying wagons pursuant to such indents is illegal, unfair and

arbitrary. This is more so as Respondent No. 1 was fully aware that

Respondent No. 3 is not entitled to use the railway lines and private

siding of the petitioner after expiry of the lease agreement dated

31.5.2022.

8. It is also alleged that there has been gross violations of the principles

of natural justice, in as much as the Petitioner was never questioned

over the status of its arrangement with Respondent No. 3 and instead

only Respondent No. 3 was approached by Respondent No. 1. It was

strenuously submitted that Respondent No. 1 did not respond to any

of the Petitioner's representations appraising it of the fact situation or

requesting it to desist from granting permission to Respondent No. 3.

9. In any case, the appeal pending before the NCLAT has been disposed

off vide judgment and order dated 9.1.2023 and in light of the same,

status quo, if any, has also come to an end. Therefore, the Respondent

(1998) 8 SCC 1

(2009) 14 SCC 451

(2010) 3 SCC 321

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No. 3 could not have been permitted to use the private siding in such

an arbitrary manner.

III. EAST COAST RAILWAY'S SUBMISSIONS:

10. On the other hand, Ld. Counsel for the Opposite Party Nos.1 and 2,

Mr. Prasanna Kumar Parhi, DSGI submits that the agreement between

the parties provided for arbitration in respect of all disputes and

differences of any kind arising out of or in connection with the

contract whether during the progress of work or after its completion

and whether before or after the termination of the contract. It was

urged that in view of the said arbitration clause, the writ court was

not competent to decide the issue involved in the dispute which had

been raised by the Petitioner Company.

IV. HINDALCO INDUSTRIES LIMITED'S SUBMISSIONS:

11. Learned Sr. Counsel for the Opposite Party No.3 Mr. P.

Chidambaram contends that the Opposite Party Nos.1 and 2 are

empowered to allow the Opposite Party No.3 to use the Private Siding

in line with Clause 19(C) of the Private Siding Agreement entered into

between the Petitioner and the Opposite Party Nos.1 and 2.

12. It is further submitted that since the Private Siding Agreement has not

been terminated by East Coast Railway or varied by either party to the

Agreement, the agreement is still in force and under the Agreement,

the Opposite Party No.3 is a co-user. Therefore, as the Railway

Administration exercises complete control on the operations of the

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siding, the permission to use the same can be granted by it without

any reference to the Petitioner herein.

V. ISSUES FOR CONSIDERATION

13. Having heard the parties and perused the materials available on

record, this court has identified the following issues to be determined:

A. Whether this Court can exercise its writ jurisdiction in the

realm of contracts?

B. Whether this Court can exercise its writ jurisdiction in the

presence of an alternative remedy?

C. Whether this Court ought to interfere in the facts of the

present case?

VI. ISSUE A: WHETHER THIS COURT CAN EXERCISE ITS WRIT JURISDICTION IN THE REALM OF CONTRACTS?

14. In the judgment of the Supreme Court rendered in Shrilekha

Vidyarthi v. State of U.P.6 , the Court was concerned with a challenge

to a general order by which the appointment of all government

counsel in all the districts of the State of U.P. came to be terminated.

The writ petition was filed under Article 32 of the Constitution of

India. Important and apposite are the following observations:

"22. There is an obvious difference in the contracts between private parties and contracts to which the State is a party. Private parties are concerned only with their personal interest whereas the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it, for public good and in public interest. The impact of

(1991) 1 SCC 212

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every State action is also on public interest. This factor alone is sufficient to import at least the minimal requirements of public law obligations and impress with this character the contracts made by the State or its instrumentality. It is a different matter that 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. However, to the extent, challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14. To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto.

An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non- arbitrariness at the hands of the State in any of its actions. ***

24. The State cannot be attributed the split personality of Dr Jekyll and Mr Hyde in the contractual field so as to impress on it all the characteristics of the State at the threshold while making a contract requiring it to fulfil the obligation of Article 14 of the Constitution and thereafter permitting it to cast off its garb of State to adorn the new robe of a private body during the subsistence of the contract enabling it to act arbitrarily subject only to the contractual obligations and remedies flowing from it. It is really the nature of its personality as State which is significant and must characterise all its actions, in whatever field, and not the nature of function, contractual or otherwise, which is decisive of the nature of scrutiny permitted for examining the validity of its act. The requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing

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which militates against the concept of requiring the State always to so act, even in contractual matters. There is a basic difference between the acts of the State which must invariably be in pubic interest and those of a private individual, engaged in similar activities, being primarily for personal gain, which may or may not promote public interest. Viewed in this manner, in which we find no conceptual difficulty or anachronism, we find no reason why the requirement of Article 14 should not extend even in the sphere of contractual matters for regulating the conduct of the State activity.

***

27. Unlike a private party whose acts uninformed by reason and influenced by personal predilections in contractual matters may result in adverse consequences to it alone without affecting the public interest, any such act of the State or a public body even in this field would adversely affect the public interest. ...

28. Even assuming that it is necessary to import the concept of presence of some public element in a State action to attract Article 14 and permit judicial review, we have no hesitation in saying that the ultimate impact of all actions of the State or a public body being undoubtedly on public interest, the requisite public element for this purpose is present also in contractual matters. We, therefore, find it difficult and unrealistic to exclude the State actions in contractual matters, after the contract has been made, from the purview of judicial review to test its validity on the anvil of Article 14."

15. As to what constitutes arbitrariness is captured in Para 36 of the

Shrilekha Vidyarthi case (supra) which reads as follows:

"36. The meaning and true import of arbitrariness is more easily visualised than precisely stated or defined. The question, whether an impugned act is arbitrary or not, is

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ultimately to be answered on the facts and in the circumstances of a given case. An obvious test to apply is to see whether there is any discernible principle emerging from the impugned act and if so, does it satisfy the test of reasonableness. Where a mode is prescribed for doing an act and there is no impediment in following that procedure, performance of the act otherwise and in a manner which does not disclose any discernible principle which is reasonable, may itself attract the vice of arbitrariness. Every State action must be informed by reason and it follows that an act uninformed by reason, is arbitrary. Rule of law contemplates governance by laws and not by humour, whims or caprices of the men to whom the governance is entrusted for the time being. It is trite that "be you ever so high, the laws are above you". This is what men in power must remember, always."

16. This Court notices that as to what constitutes arbitrariness fell for

consideration by the Supreme Court in a case which involved

cancellation of the examination held as part of a recruitment process,

in East Coast Railway v. Mahadev Appa Rao7. The following

passages are reproduced herein which are apposite for this case :

"19. Black's Law Dictionary describes the term "arbitrary"

in the following words:

'arbitrary. adj.--1. Depending on individual discretion; specif., determined by a Judge rather than by fixed rules, procedures, or law. 2. (Of a judicial decision) founded on prejudice or preference rather than on reason or fact. This type of decision is often termed arbitrary and capricious.'

20. To the same effect is the meaning given to the expression "arbitrary" by Corpus Juris Secundumwhich explains the term in the following words:

(2010) 7 SCC 678

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'Arbitrary.--Based alone upon one's will, and not upon any course of reasoning and exercise of judgment; bound by no law; capricious; exercised according to one's own will or caprice and therefore conveying a notion of a tendency to abuse possession of power; fixed or done capriciously or at pleasure, without adequate determining principle, non-

rational, or not done or acting according to reason or judgment; not based upon actuality but beyond a reasonable extent; not founded in the nature of things; not governed by any fixed rules or standard; also, in a somewhat different sense, absolute in power, despotic, or tyrannical; harsh and unforbearing. When applied to acts, "arbitrary" has been held to connote a disregard of evidence or of the proper weight thereof; to express an idea opposed to administrative, executive, judicial, or legislative discretion; and to imply at least an element of bad faith, and has been compared with "willful".

***

23. Arbitrariness in the making of an order by an authority can manifest itself in different forms. Non-application of mind by the authority making the order is only one of them. Every order passed by a public authority must disclose due and proper application of mind by the person making the order. This may be evident from the order itself or the record contemporaneously maintained. Application of mind is best demonstrated by disclosure of mind by the authority making the order. And disclosure is best done by recording the reasons that led the authority to pass the order in question. Absence of reasons either in the order passed by the authority or in the record contemporaneously maintained is clearly suggestive of the order being arbitrary hence legally unsustainable."

17. More recently, in M.P. Power Management Co. Ltd. v. Sky Power

Southeast Solar India (P) Ltd.8, the Supreme Court held:

(2023) 2 SCC 703

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"75. We would, therefore, sum up as to when an act is to be treated as arbitrary. The Court must carefully attend to the facts and the circumstances of the case. It should find out whether the impugned decision is based on any principle. If not, it may unerringly point to arbitrariness.

If the act betrays caprice or the mere exhibition of the whim of the authority it would sufficiently bear the insignia of arbitrariness. In this regard supporting an order with a rationale which in the circumstances is found to be reasonable will go a long way to repel a challenge to State action. No doubt the reasons need not in every case be part of the order as such. If there is absence of good faith and the action is actuated with an oblique motive, it could be characterised as being arbitrary. A total non-application of mind without due regard to the rights of the parties and public interest may be a clear indicator of arbitrary action. A wholly unreasonable decision which is little different from a perverse decision under the Wednesbury doctrine would qualify as an arbitrary decision under Article 14. Ordinarily visiting a party with the consequences of its breach under a contract may not be an arbitrary decision."

18. The exercise of writ jurisdiction in contractual matters, particularly

when one of the parties is the State or an instrumentality thereof, has

been a subject of significant judicial examination. Article 14 of the

Constitution mandates equality before the law and equal protection of

the laws. It serves as a cornerstone for administrative law in India,

setting a high standard for fairness, non-arbitrariness, and

reasonableness in State action. These principles must permeate every

act of the State, including those undertaken within the framework of

contracts. Writ jurisdiction under Article 226 of the Constitution is

wide and not confined to enforcement of fundamental rights alone.

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The High Courts can issue writs for "any other purpose," thereby

encompassing situations where a public authority, while acting in a

contractual setting, breaches constitutional mandates of fairness and

reasonableness. The State cannot adopt a dual personality -- public

while entering a contract and private while performing it -- to evade

its constitutional duties.

19. Therefore, writ jurisdiction can indeed be exercised in contractual

matters involving the State, especially when the impugned action has

a public law element, is arbitrary, or violates the principles of natural

justice.

VII. ISSUE B: WHETHER THIS COURT CAN EXERCISE ITS WRIT

JURISDICTION IN THE PRESENCE OF AN ALTERNATIVE

REMEDY?

20. In State of U.P. v. Bridge & Roof Co. (India) Ltd.9, the Apex Court

was dealing with a case of a writ petition filed by the respondent

therein which was a public sector corporation and seeking payment

allegedly due from the appellant State. The Court noted that the

contract in question contained articles providing inter alia for

settlement of disputes by reference to arbitration. The very resort to

Article 226 was found to be misconceived in the circumstances. The

Court also laid down as follows:

"16. Firstly, the contract between the parties is a contract in the realm of private law. It is not a statutory contract. It is governed by the provisions of the Contract Act or, may be,

(1996) 6 SCC 22

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also by certain provisions of the Sale of Goods Act. Any dispute relating to interpretation of the terms and conditions of such a contract cannot be agitated, and could not have been agitated, in a writ petition. That is a matter either for arbitration as provided by the contract or for the civil court, as the case may be. Whether any amount is due to the respondent from the appellant Government under the contract and, if so, how much and the further question whether retention or refusal to pay any amount by the Government is justified, or not, are all matters which cannot be agitated in or adjudicated upon in a writ petition.

The prayer in the writ petition viz. to restrain the Government from deducting a particular amount from the writ petitioner's bill(s) was not a prayer which could be granted by the High Court under Article 226. Indeed, the High Court has not granted the said prayer."

21. At this juncture, ABL International Ltd. v. Export Credit Guarantee

Corpn. of India Ltd.10 marks a milestone, as it uphelds, in the matter of

the superior court interfering in contractual matters where the State is

a player even after the contract is entered into. A petition was filed

under Article 226 wherein the respondent which was incorporated

under the Companies Act repudiated an insurance claim made by the

appellant writ petitioner. The Supreme Court undertook an elaborate

discussion of the earlier case law. This Court finds that the Supreme

Court dealt with several obstacles which were sought to be posed by

the respondent. They included disputed questions of facts being

involved, availability of alternate remedy, and the case involving

(2004) 3 SCC 553

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entertaining a money claim. The Supreme Court went on to hold as

follows :

"27. From the above discussion of ours, 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."

22. No doubt, this Court must also notice para 28 of ABL (supra) which

serves as an admonition against considering the availability of the

remedy under Article 226 as an absolute charter to invoke jurisdiction

in all cases :

"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 [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

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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."

23. In Noble Resources Ltd. v. State of Orissa11 , the Supreme Court

followed ABL (supra). However, in the facts of the said case again the

matter involving refusal by a public authority to honour the contract

in the matter of purchase of iron ore, the Court held as follows:

"15. It is trite that if an action on the part of the State is violative of the equality clause contained in Article 14 of the Constitution of India, a writ petition would be maintainable even in the contractual field. A distinction indisputably must be made between a matter which is at the threshold of a contract and a breach of contract; whereas in the former the court's scrutiny would be more intrusive, in the latter the court may not ordinarily exercise its discretionary jurisdiction of judicial review, unless it is found to be violative of Article 14 of the Constitution. While exercising contractual powers also, the government bodies may be subjected to judicial review in order to prevent arbitrariness or favouritism on their part. Indisputably, inherent limitations exist, but it would not be correct to opine that under no circumstances a writ will lie only because it involves a contractual matter."

24. The Apex Court went on to approve of ABL (supra) and observed that

the Supreme Court had declared that no decision lays down as an

absolute rule that in all cases of disputed questions of fact, the parties

should be relegated to a civil court. This Court may also notice para

29:

(2006) 10 SCC 236

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"29. Although the scope of judicial review or the development of law in this field has been noticed hereinbefore particularly in the light of the decision of the Hon'ble Supreme Court in ABL International [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] each case, however, must be decided on its own facts. Public interest as noticed hereinbefore, may be one of the factors to exercise the power of judicial review. In a case where a public law element is involved, judicial review may be permissible. (See Binny Ltd. v. V. Sadasivan [Binny Ltd. v. V. Sadasivan, (2005) 6 SCC 657 : 2005 SCC (L&S) 881] and G.B. Mahajan v. Jalgaon Municipal Council [G.B. Mahajan v. Jalgaon Municipal Council, (1991) 3 SCC 91] )"

25. The existence of an alternate remedy, is, undoubtedly, a matter to be

borne in mind in declining relief in a writ petition in a contractual

matter. Again, the question as to whether the writ petitioner must be

told off the gates, would depend upon the nature of the claim and

relief sought by the petitioner, the questions, which would have to be

decided, and, most importantly, whether there are disputed questions

of fact, resolution of which is necessary, as an indispensable prelude

to the grant of the relief sought. Undoubtedly, while there is no

prohibition, in the writ court even deciding disputed questions of fact,

particularly when the dispute surrounds demystifying of documents

only, the Court may relegate the party to the remedy by way of a civil

suit.

26. The existence of a provision for arbitration, which is a forum intended

to quicken the pace of dispute resolution, is viewed as a near bar to

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the entertainment of a writ petition. However, it is a "near" bar and

can under no circumstances be held to be a "complete" bar.

27. In a case the State is a party to the contract and a breach of a contract

is alleged then having regard to the position of the State and its duty

to act fairly and to eschew arbitrariness in all its actions, resort to the

constitutional remedy on the cause of action, that the action is

arbitrary, is permissible.

28. However, it must be made clear that every case involving breach of

contract by the State, cannot be dressed up and disguised as a case of

arbitrary State action. While the concept of an arbitrary action or

inaction cannot be cribbed or confined to any immutable mantra, and

must be laid bare, with reference to the facts of each case, it cannot be

a mere allegation of breach of contract that would suffice. What must

be involved in the case must be action/inaction, which must be

palpably unreasonable or absolutely irrational and bereft of any

principle. An action, which is completely mala fide, can hardly be

described as a fair action and may, depending on the facts, amount to

arbitrary action. The question must be posed and answered by the

Court and all this Court intends to lay down is that there is a

discretion available to the Court to grant relief in appropriate cases.

29. A lonestar, which may illumine the path of the Court, would be the

dimension of public interest subserved by the Court interfering in the

matter, rather than relegating the matter to the alternate forum.

30. Another relevant criteria is, if the Court has entertained the matter,

then, while it is not tabooed that the Court should not relegate the

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party at a later stage, ordinarily, it would be a germane consideration,

which may persuade the Court to complete what it had started,

provided it is otherwise a sound exercise of jurisdiction to decide the

matter on merits in the writ petition itself.

31. As held by the Apex Court in State of U.P. v. Sudhir Kumar Singh12

violation of natural justice has been recognised as a ground signifying

the presence of a public law element and can found a cause of action

premised on breach of Article 14.

32. Under Article 226 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. But the High Court has imposed upon itself certain

restrictions one of which is that if an effective and efficacious remedy

is available, the High Court would not normally exercise its

jurisdiction. But the alternative remedy has been consistently held by

the Supreme Court not to operate as a bar in at least three

contingencies, namely, where the writ petition has been filed for the

enforcement of any of the Fundamental Rights or where there has

been a violation of the principle of natural justice or where the order

or proceedings are wholly without jurisdiction or the vires of an Act is

challenged. There is a plethora of case-law on this point but to cut

down this circle of forensic whirlpool, this Court would rely on some

old decisions of the evolutionary era of the constitutional law as they

still hold the field.

(2021) 19 SCC 706

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33. Further, the Apex Court in Rashid Ahmed v. Municipal Board,

Kairana13 laid down that existence of an adequate legal remedy was a

factor to be taken into consideration in the matter of granting writs.

This was followed by another case, namely, K.S. Rashid &

Son v. Income Tax Investigation Commission14 which reiterated the

above proposition and held that where alternative remedy existed, it

would be a sound exercise of discretion to refuse to interfere in a

petition under Article 226. This proposition was, however, qualified

by the significant words, "unless there are good grounds therefor", which

indicated that alternative remedy would not operate as an absolute

bar and that writ petition under Article 226 could still be entertained

in exceptional circumstances.

34. A specific and clear rule was laid down in State of U.P. v. Mohd.

Nooh15 as under:

"But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies."

35. This proposition was considered by a Constitution Bench of the

Supreme Court in A.V. Venkateswaran, Collector of

1950 SCC 221

AIR 1954 SC 207

AIR 1958 SC 86

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Customs v. Ramchand Sobhraj Wadhwani16 and was affirmed and

followed in the following words:

"The passages in the judgments of the Hon'ble Supreme Court we have extracted would indicate (1) that the two exceptions which the learned Solicitor General formulated to the normal rule as to the effect of the existence of an adequate alternative remedy were by no means exhaustive, and (2) that even beyond them a discretion vested in the High Court to have entertained the petition and granted the petitioner relief notwithstanding the existence of an alternative remedy. We need only add that the broad lines of the general principles on which the Court should act having been clearly laid down, their application to the facts of each particular case must necessarily be dependent on a variety of individual facts which must govern the proper exercise of the discretion of the Court, and that in a matter which is thus pre-eminently one of discretion, it is not possible or even if it were, it would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the Court."

36. The Supreme Court in Union of India v. Tantia Construction (P)

Ltd.17 held that:

"33. Apart from the above, even on the question of maintainability of the writ petition on account of the arbitration clause included in the agreement between the parties, it is now well established that an alternative remedy is not an absolute bar to the invocation of the writ jurisdiction of the High Court or the Supreme Court and that without exhausting such alternative remedy, a writ petition would not be maintainable. The various decisions cited by Mr Chakraborty would clearly indicate that the

AIR 1961 SC 1506

(2011) 5 SCC 697

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constitutional powers vested in the High Court or the Supreme Court cannot be fettered by any alternative remedy available to the authorities. Injustice, whenever and wherever it takes place, has to be struck down as an anathema to the rule of law and the provisions of the Constitution.

34. We endorse the view of the High Court that notwithstanding the provisions relating to the arbitration clause contained in the agreement, the High Court was fully within its competence to entertain and dispose of the writ petition filed on behalf of the respondent Company. We, therefore, see no reason to interfere with the views expressed by the High Court on the maintainability of the writ petition and also on its merits."

37. Much water has since flown under the bridge, but there has been no

corrosive effect on these decisions which, though old, continue to hold

the field with the result that law as to the jurisdiction of the High

Court in entertaining a writ petition under Article 226 of the

Constitution, in spite of the alternative statutory remedies, is not

affected, especially in a case where the authority against whom the

writ is filed is shown to have acted whimsically and arbitrarily.

VIII. ISSUE C: WHETHER THIS COURT OUGHT TO INTERFERE IN THE FACTS OF THE PRESENT CASE?

38. When the writ petition was moved in 2022, the Respondent No.1

challenged it's maintainability by filing its preliminary objection on

the grounds of existence of an arbitration agreement and pendency of

proceedings before the NCLAT and the status quo order dated

14.1.2022 made by the NCLAT. As discussed above, it is no longer res

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integra that mere presence of an arbitration agreement by itself will

not oust the writ jurisdiction of this court.

39. This Court now considers it apposite to rely on the relevant clauses of

the Agreements entered into between the Parties. The same are

reproduced herein for the sake of convenience:

a. Lease Agreement dated 28.6.2002

i. "... AND WHEREAS the SECOND PARTY, the Lessee has requested the FIRST PARTY to allow him to use on lease basis the said railway tracks from Hirakud to Sambalpur and the three locomotives for transportation of its materials to its Hirakud works and incidental activities necessary for such transportation for a period of 20 years and the FIRST PARTY has accepted the said request of the SECOND PARTY and agreed to allow the SECOND PARTY to use on lease basis the said tracks and three locomotives for its business for an initial period of 20 years commencing from 1st June 2002 to 31st May 2022, on payment of the sum of ₹ 40 lakhs rental per annum payable within the first week of June each year during the tenure of the lease period of 20 years and on the terms and conditions mutually agreed as under between the parties"

ii. "1. That this agreement shall commence on and from 1.6.2002 and shall remain in force for a period of 20 years expiring on 31.5.2022. However, on its expiry, the same may be renewed. Further on mutually agreed terms subject to approval of the competent authorities, provided less, he gives three months advance intimation in writing seeking extension."

iii. "3. The SECOND PARTY shall be entitled to use the said railway tracks along with the associated land and three locomotives uninterruptedly for a period of 20 years commencing from 1.6.2002 to 31.5.2022, only for the aforesaid purpose of transporting its materials from

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Hirakud to Sambalpur and back and activities incidental thereto."

b. Private Siding Agreement dated 28.9.2005

i. "15. (a) Siding not to be used by other Persons: no traffic in word or outward other than that of the applicants work shall at any time be sent over the siding by the applicant except with the prior written permission of the railway administration and the applicant undertakes not to permit any other person who whomsoever to use the siding and not to take or receive or permit any other person take or receive from any other person whom so ever any consideration or remuneration of any sort or inspect of the carrying of any commodity over or for any purposewhatsoever in connection with siding, except with the prior written permission of the railway administration and in all cases of disputes or differences with regard to any matters mentioned in this clause, the decisions of the chief operations manager/chief commercial manager of East Coast Railway shall be final and binding on the applicant.

(b) The applicant is forbidden to assign, transfer, or sublet in any manner whatsoever either/whole or any part of the siding without prior permission of the railway administration. The booking and delivery of traffic of co- user of the siding shall be governed by the same rules and regulations as applicable to the siding owner as far as levy of freight and other charges are concerned. The siding owner shall give a written undertaking that Hindalco Industries, Hirakud (name of the party/co-user) has been allowed to use HIW siding (name of the siding) owned by him, his consent and that the co-user will be responsible for the payment of all railway dues that may be accrued as a result of granting of such facility. "

ii. "19. Railway Administration's Rights regarding use of

the Sidings:

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... (c) to use or to permit the use of the siding or any extension or part there for the traffic of any person or persons other than the applicant and to work traffic over the siding or any extension or part there of to and from any other siding or sidings or branches or extensions there from which may be constructed as aforesaid jointly with the traffic of the applicant upon payment by such person or persons to the applicant of either such portion of the cost originally paid by the applicant to the railway administration in respect of the land and subgrade work or such tollage for such use as aforesaid as shall be decided by the General Manager for the time being of the railway administration or such other officer, as may be nominated by him, whose decisions shall be final conclusive and binding on the applicant as to whether a portion of the cost shall be payable, and if so, the amount thereof or whether a tollage shall be payable, and if so the amount of rate thereof. The Railway Administration shall collect such proportionate cost on behalf of the applicant but shall not be responsible for collection of tollage for and on behalf of the applicant, but the applicant may enter into agreement with the person or persons who has/have been permitted the use of siding or part thereof by the railway administration on the payment by the letter the use of the siding or any extension or part thereof by the railway administration or by other persons shall be so conducted in such manner and to such extent as to interfere as little as possible with the free use of the siding by the applicant whose traffic shall have precedence."

40. This Court now draws its attention to the Respondent No. 1's own

letter dated 2.3.2022 to Respondent No. 3 and reproduces a part

thereof:

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"In terms of Clause 15(C) of the private siding agreement under reference (i) that was executed between ECoR and Hirakud Industrial Works, booking and delivery of Hindalco (erstwhile INDAL) rail traffic is continuing at the private siding of HIW. However, while referring to the lease agreement under reference (ii) it is understood that period of lease agreement between HWL and HINDALCO for railway tracks and associated land is going to expire on 31.05.2022. In view of the above HNDALCO status at the private siding after 31.05.2022, may please be communicated to this office at the earliest"

41. Upon receiving a reply with a request to maintain status quo from

Respondent No. 3, Respondent No. 1 once again wrote via letter dated

23.5.2022 that:

"Your appeal vide letter under reference for use of Hirakud Industrial Works Siding has been examined. Railway Board's FM Circular No. 17 of 2021 dated 11.08.2021 stipulates that the private siding is only for end users. However, siding owner may permit multiple co-users as per definition of 'Co-User" given in Para - 2(v) of Private Siding Policy (FM Circular - 11 of 2016) and inform Zonal Railway at least 07 working days in advance. Zonal Railway shall take necessary action for inclusion of such co- users in FOIS, within these 07 working days. On the issues as mentioned in your letter under reference, Authority desired that the decision of NCLAT may be communicated to this office at the earliest."

42. Here, this Court deems it appropriate to look at the definition of end

user and co-user in the Private Siding Policy (FM Circular - 11 of

2016) as referred to by the Respondent No. 1. End user is defined in

Clause 2(vi) as "means a user who owns a plant/ manufacturing unit or

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production unit/mines, and the siding is for the purpose of his exclusive use

or for handling the products being used or manufactured or produce there in

this also include sidings of FCI, POL and containers." Co user is defined

in Clause 2 (v) as "refers to the permission given to a rail user (other than

the owner of a private siding) by the railway administration, for using the

siding for handling of his own goods, traffic at that siding subject to the

provisions of the siding agreement."

43. In the present case, there exist no disputed question of fact, as

Respondent No. 1 does not dispute that it cannot permit Respondent

No. 3 to use the railway lines and private siding of the petitioner

company after expiry of the lease agreement without consulting with

the petitioner company in the absence of any application being made

by Respondent No. 3 to the Railway Administration to use the

Petitioner's private siding. In fact, Respondent No. 3 had also

expressly stated in its own letter dated 24.5.2022 and 30.5.2022, that it

would approach the person who came into control of the petitioner

company post disposal of the NCLAT proceedings in order to obtain

permission to use the petitioner's private siding post 31.5.2022. It

appears from the documents placed on record that the only

explanation given by Respondent No. 1 for not acting pursuant to the

repeated requests of the Petitioner is that the letters addressed to the

petitioner in the past at its registered office return undelivered and

therefore it did not attempt to make any further communication. This

reasoning in this Court's opinion, reeks of non-application of mind,

mala fide, illegality, and arbitrariness.

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44. Respondent No. 1 did not respond to the letters of the petitioner dated

31.5.2022, 2.6.2022 and 12.12.2022. It is the contention of Respondent

No.1 that it accepted the indent placed by Respondent No.3 because

of the status quo order of NCLAT which, in arguendo would mean that

no fresh lease/permission could be granted by the petitioner company

therefore, let the things be as is. However, after the judgement and

order made on 9.1.2024 by the NCLAT allowing the appeal and

setting aside the CIRP of the petitioner, the Respondent No. 1 could

not have any excuse for not acting on the representations of the

petitioner and in fact ought to have responded to the same.

45. It is not the case of Respondent No.1, either in the contemporaneous

correspondence or even in the counter filed by it that it can permit the

Respondent No.3 to use the petitioner's private siding as a co-user

without the prior permission/consent of the petitioner. In fact, it is the

categoric stand of the Respondent No.1 as would be evident from its

letter dated 2.3.2022 and 23.5.2022, that the Respondent No. 3, in fact,

required permission from the petitioner to use the petitioners private

siding.

46. This Court has no hesitation in coming to the conclusion that the acts

of Respondent No.1 are violative of Article 14 of the Constitution. The

Respondent No.1 is expected to act in a fair, just and legal manner in

its dealings with private contracts as has also been discussed in Issue

A above.

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47. The failure, inaction and refusal of Respondent No.1 to act on the

representations of the petitioner and the consequential violation of the

petitioner's rights are grossly arbitrary and warrants interference.

48. In the court, while hearing, multiple issues were agitated, such as the

petitioner is a shell company and as such is not entitled to any

equitable relief, Respondent No.3 contending that the private siding

agreement has not been terminated while completely ignoring the fact

that it is not a party to the private siding agreement, alleging that the

private siding agreement is a statutory agreement, who the land on

which the private side is built belongs to, the workers dues not being

paid. In this Court's opinion, these issues were agitated to muddle

and detract from the core issue.

49. It is a fact that there was a lease agreement between the Petitioner and

Respondent No. 3 which expired on 31.5.2022 due to efflux of time

and no notice or intimation seeking extension. On this front alone, the

Respondent No. 3 had no further legal rights to continue to use the

private siding. Moreover, the private siding agreement between the

Petitioner and Respondent No. 1 which still remains in force does not

establish any jural relationship between Respondent No. 1 and

Respondent No. 3. As an alien to the agreement, who was brought in

at the decision of the Petitioner, the Petitioner's consent ought to have

been taken before permitting continuous use of the private siding

after the expiry of the lease agreement - a fact that has remained

wholly undisputed by the Respondent No. 1 itself.

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50. This Court is also supported in its conclusion by the judgment dated

9.5.2024 of the High Court of Chattisgarh in W.P.(C) No. 2989 of 2021

titled as "Ultratech Cement Limited v. Union of India and Ors.". In a

similar matter, vide the said judgment, the Court was pleased to hold

that after reading the entire scheme, it can safely be held that without

seeking the consent of the owner of the private railway siding, the

decision so arrived by the Railway Authorities in allowing another

person to utilise the private siding would be erroneous. Upon an intra

court appeal being preferred against the aforesaid judgment, the

Division Bench of the High Court of Chattisgarh in Union of India v.

Ultratech Cement Ltd. 18 held as follows:

"48. The issue with regard to opportunity of hearing to be granted to M/s Ultratech Cement Ltd. is of much importance as every person is entitled to get a fair chance of hearing if his rights and interests are going to be affected. The railways cannot permit any other party to use the private siding of Ultratech Cement Ltd. without its consent and it was Ultratech Cement Ltd. which had incurred the expenses for construction of the private siding. The action of the railways in granting IPA was in total violation of the principles of natural justice. The railways can very well permit any third-party to use the private railway siding, but with a caveat that the owner of the private siding should be given a fair chance of being heard. We are in full agreement with the reasoning and findings arrived at by the learned Single Judge and we do not find any illegality in the order impugned herein whereby it has quashed the IPA dated 8-4- 2021 granted in favour of M/s Shree Cement Ltd."

2024 SCC OnLine Chh 8219

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51. In the present petition, the petitioner has not challenged any technical

and complex decisions taken by the railways. Very simply put, the

petitioner being the owner of the private siding was required to be

heard before taking any decision with regard to the use of private

railway siding was taken by the Respondent Nos. 1 and 2. The same

having not been done, amounted to a gross violation of the principles

of natural justice.

52. In order to do complete justice, this Court also takes note of the

intervention application i.e. I.A. No 8542 of 2022 filed by the workers

in the present Writ Petition. The claims of the workers are yet to be