Telangana High Court

M/S. Raj Kumar Dyeing And Printing ... vs State Of Telangana on 10 December, 2021

Bench: B.Vijaysen Reddy

     HONOURABLE SRI JUSTICE B. VIJAYSEN REDDY

                WRIT PETITION No.6506 OF 2021

ORDER :

This writ petition is filed challenging the action of the

respondents in not paying the bill amount bearing bill No.RKD/19-

20/32 dated 26.11.2019 for Rs.1,52,06,730/- and Bill No.RKD/19-

20/32 dated 18.02.2020 for Rs.1,39,49,145/- along with interest at

18% per annum from the date of supply on the outstanding amount as

illegal, against the law and unconstitutional.

2. The facts of the case, in brief, are that the petitioner is

engaged in the business of manufacturing garments and shoes. It had

been supplying clothes, shoes and other accessories for the students

and sports persons since several years. Respondent No.3 - the State

Project Officer, Samagra Shiksha, Telangana, Hyderabad has placed

order for supply of track pants, suits, sports shoes, cotton socks and

honey comb t-shirts, short-pants for girls studying VIII and IX in 475

KGBV Schools in the State of Telangana.

(i) The petitioner states that it has submitted quotation for the

year 2018-19 and the same was accepted by respondent No.3 vide

purchase order in Lr.No.341/TSS/T9/KGBV/2019 dated 12.02.2019.

The cost of total items to be supplied was Rs.5,06,10,800/-. In

compliance of the said purchase order, the petitioner has supplied

material in a phased manner and the entire quantity ordered has been

supplied without any blame and completed by 18.02.2020. The

petitioner has raised bills during the period of supply i.e., on

25.10.2019 for Rs.1,07,97,570/-, on 11.10.2019 for Rs.44,31,998/-, on

09.12.2019 for Rs.87,55,898/-, and on 26.11.2019 and 18.02.2020 for

Rs.1,52,06,730/- and Rs.1,39,49,145/- respectively.

(ii) The petitioner supplied the material to the full satisfaction

of the respondents. It was accepted by the respondents without any

demur. Having remitted the amount under the afore-referred first

three bills, the respondents have not chosen to remit the amounts

covered by the bills dated 26.11.2019 and 18.02.2020 for

Rs.1,52,06,730/- and Rs.1,39,49,145/-. There is no justifiable reason

for non-payment of the above amounts for more than a year. Legal

notice dated 02.03.2021 was issued calling upon the respondents to

pay the amount due along with interest at 18% per annum.

3. In the counter affidavit filed by respondent Nos.2 and 3, it is

stated that the writ petition is not maintainable. The petitioner has

entered into a contract bound by contractual obligations. The dispute

is purely civil in nature. Similar cases are pending regarding payment

in O.S. No.395 of 2013 before the learned X Additional Chief Judge,

City Civil Court, Hyderabad and O.S. No.322 of 2017 before the

Chief Judge, City Civil Court, Hyderabad. The petitioner is actually

seeking recovery of money by invoking the writ jurisdiction. The

claim of interest at 18% per annum is untenable. The contract in

question is non-statutory and purely contractual and the rights of the

parties are governed by the terms of the contract, as such, no writ or

order can be issued under Article 226 of the Constitution of India

compelling the authorities for breach of contract which is pure and

simple and that the right can be claimed only before the civil Court.

4. In the reply affidavit of the petitioner, it is stated that there is

no dispute regarding payment of the amount. In ABL International

Limited v. Export Credit Guarantee Corporation of India

Limited1, the Hon'ble Supreme Court has held that the writ is

maintainable even in monetary claims. Respondent No.3 is an

instrumentality of the State under Article 12 of the Constitution of

India. Pendency of civil suits filed by the similarly placed third

parties cannot be a ground to deny payment to the petitioner.

On technical pleas, the respondents are trying to deny payment.

5. In the additional counter affidavit filed by respondent Nos.2

and 3, it is reiterated that writ remedy is not appropriate remedy. The

High Court would not examine the issue unless the petitioner is

seeking enforcement of public duty. The petitioner has not

successfully completed the contract. The petitioner has not filed

delivery challans and receipts showing actual supply of the goods.

Hence, there are disputed questions of fact.

6. Heard Mr. P. Gangaiah Naidu, learned senior counsel,

appearing for Ms. G. Bhanu Priya, learned counsel for the petitioner,

(2004) 3 SCC 553

learned Government Pleader for School Education appearing for

respondent Nos.1, Mr. G. Bhaskar, learned counsel for respondent

Nos.2 and 3, and perused the material on record.

7. Mr. P. Gangaiah Naidu, learned senior counsel appearing for

the petitioner, has submitted that there is no dispute regarding

payment of amount under the bills dated 26.11.2019 and 18.02.2020.

The stocks supplied by the petitioner were, in fact, utilised by

respondent No.3. Nothing is stated in the counter denying payment

except raising objection about maintainability of the writ petition.

8. Mr. G. Bhaskar, learned counsel appearing for respondent

Nos.2 and 3, submits that the petitioner invoked the writ remedy

instead of filing a civil suit for recovery of the amount. The petitioner

may be permitted to submit representation to respondent No.3 and the

same shall be disposed of.

9. Having considered the rival submissions of the learned

senior counsel appearing for the petitioner and the learned counsel for

respondent Nos.2 and 3, this Court is of the view that the stand taken

by respondent Nos.2 and 3 is unreasonable and unjust. Out of five

bills, three bills have been paid by respondent Nos.2 and 3 and two

bills remained unpaid.

10. Respondent Nos.2 and 3 have taken inconsistent stands in

their counter affidavit and additional counter affidavit. There is no

denial of supply of stock in the counter affidavit. Coming to the

additional counter affidavit, respondents have made vague averments

that the materials as required were not supplied. If such was the case,

nothing prevented respondent Nos.2 and 3 to return the stocks or

intimate the petitioner that there is deficiency on its part. In the

absence of any material to show that stocks have not been received by

respondent Nos. 2 and 3 and were not utilised, this Court holds that

the stand taken by respondent Nos.2 and 3 is false and only to avoid

payment to the petitioner.

11. Not to entertain writ petitions when alternate remedy is

available is a self-imposed restriction of the Constitutional Courts. It

is not as if the High Court does not have jurisdiction to grant relief to

the aggrieved parties even in monetary claims when there is no

dispute regarding the payment due. It is wholly unjustifiable on the

part of respondent No.3 to take technical objection saying that civil

suit for recovery has to be filed. Though it cannot be denied that the

relationship between the petitioner and respondent No.3 is contractual

in nature, respondent No.3 being the instrumentality of the State is

bound to act in a fair, reasonable and transparent manner. Having

purchased goods, respondent No.3 has not only utilised such stocks

but also paid amount under three bills out of five bills raised by the

petitioner, as such, there is no reason whatsoever for respondent No.3

to withhold payment of amount under the remaining two bills. Hence,

this Court is of the view that the action of respondent No.3 is uncalled

for, arbitrary and unwarranted.

12. In ABL International Limited's case (Supra 1), the

Hon'ble Supreme Court has made the following observations in

paragraph Nos.28, 52 and 53:

"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, Mumbai [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.

52. On the basis of the above conclusion of ours, the question still remains why should we grant the reliefs sought for by the appellants in a writ petition when a suitable efficacious alternate remedy is available by way of a suit. The answer to this question, in our opinion, lies squarely in the decision of this Court in the case of Shrilekha Vidyarthi ((1991) 1 SCC 212) wherein this Court held :

The requirement of Article 14 should extend even in the sphere of contractual matters for regulating the conduct of the State activity. Applicability of Article 14 to all executive actions of the State being settled and for the same reason its applicability at the threshold to the making of a contract in exercise of the executive power being beyond dispute, the State cannot thereafter cast off its personality and exercise unbridled power unfettered by the requirements of Article 14 in the sphere of contractual matters and claim to be governed therein only by private law principles applicable to private individuals whose rights flow only from the terms of the contract without anything more. The personality of the State, requiring regulation of its conduct in all spheres by requirement of Article 14, does not undergo such a radical change after the making of a contract merely because some contractual rights accrue to the other party in addition. It is not as if the requirement of Article 14 and contractual obligations are alien concepts, which cannot coexist. The Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the Preamble. Therefore, total exclusion of Article 14 - non-arbitrariness which is basic to rule of law - from State actions in contractual field is not justified. This is more so when the modern trend is also to examine the unreasonableness of a term in such contracts where the bargaining power is unequal so that these are not negotiated contracts but standard form contracts between unequals.

Unlike the private parties 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 every State action is also on public interest. It is really the nature of its personality as State which is significant and must characterize 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 which militates against the concept of requiring the State always to so act, even in contractual matters. 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 of non-arbitrariness at the hands of the State in any of its actions.

53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution. Thus if we apply the above principle of applicability of Article 14 to the facts of this case, then we notice that the first respondent being an instrumentality of State and a monopoly body had to be approached by the appellants by compulsion to cover its export risk. The policy of insurance covering the risk of the appellants was issued by the first respondent after seeking all required information and after receiving huge sums of money as premium exceeding Rs.16 lakhs. On facts we have found that the terms of the policy do not give room to any ambiguity as to the risk covered by the first respondent. We are also of the considered opinion that the liability of the first respondent under the policy arose when the default of the exporter occurred and thereafter when Kazakhstan Government failed to fulfil its guarantee. There is no allegation that the contracts in question were obtained either by fraud or by misrepresentation. In such factual situation, we are of the opinion, the facts of this case do not and should not inhibit the High Court or this Court from granting the relief sought for by the petitioner."

13. In the light of the above observations of the Hon'ble

Supreme Court, this Court is of the view that there is no embargo

for this Court to entertain the writ petition under Article 226 of

the Constitution of India in matters relating to contractual

obligations. As pointed out above, there is no dispute at all

regarding payment of bills dated 26.11.2019 and 18.02.2020,

except for a technical objection raised by respondent No.3 that

civil remedy is the appropriate remedy. In the opinion of this

Court, respondent No.3 being instrumentality of the State acted in

an arbitrary and unfair manner and the same is in violation of

Article 14 of the Constitution of India. The judgment in

Assistant Commissioner (CT) LTU, Kakinada v. Glaxo Smith