IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6086 OF 2015
(@ SLP(C) NO. 19380 OF 2014)
State of Kerala & Ors. ... Appellants
Versus
M.K. Jose ... Respondent
J U D G M E N T
Dipak Misra, J.
The present appeal, by special leave, assails the correctness of the
judgment dated 24.02.2014 passed by the High Court of Kerala at Ernakulam
in W.A. No. 1912/2013 whereby the Appellate Bench has reversed the decision
of the learned Single Judge rendered in W.P.(C) No. 22541 of 2013
where under he had declined to interfere with the order of the Secretary,
Public Works Department, Road and Projects of the State terminating the
contract awarded to the respondent and forfeiting the security deposit
placed by the contractor for the work to the state and further stating that
the work had been put an end to at the cost and risk of the contractor.
2. Exposition of facts with essential details is imperative to
appreciate the controversy in proper perspective and also to consider the
manner in which the Appellate Bench has exercised the writ jurisdiction
under Article 226 of the Constitution in respect of a matter relating to
termination of contract. The respondent was awarded the work, namely,
“Stimulus package-improvements to Kannavam-Idumba-Trikadaripoyil Road Km.
0/000 to 9/100 in Kannur District” and accordingly an agreement was
executed between the parties on 18.12.2010. The site for the work was
handed over to the respondent on 27.12.2010 and the work was to be
completed within a period of 12 months. Thus, the work, as requisite,
under the terms of the contract was to be completed in all respects as on
26.12.2011. The respondent could not complete the work in time and on a
request being made, time was initially extended up to 30.06.2012 and
thereafter further extension was granted upto 31.03.2013.
3. As is perceptible from the order of termination of the contract,
despite issue of several notices and instructions, the contractor failed to
complete the work even during the extended period. The Executive Engineer
of the Department issued a memorandum on 14.02.2013 stopping the work. As
there was some deviation of work, the revised estimate was required to be
done but the same was not sanctioned by the Government. At that juncture,
the respondent preferred W.P.(C) No. 5672 of 2012 seeking appropriate
direction to the Government to pass orders sanctioning the revised
estimate. The High Court disposed of the writ petition directing the
Principal Secretary to take a decision on the proposal of revised estimate.
Thereafter, the respondent filed a contempt petition which was eventually
dropped.
4. As the factual matrix would further unfurl, the respondent submitted
a representation to the Government and thereafter filed W.P.(C) No. 23087
of 2012. The High Court directed the Principal Secretary, PWD to consider
and pass orders on his representation. It is apt to note here that the
respondent had filed series of writ petitions, namely, W.P.(C) No. 26075 of
2012 and W.P.(C) No. 5690 of 2013 and the High Court vide order dated
08.04.2013 in W.P.(C) No. 5690 of 2013, directed the Secretary, PWD to pass
appropriate orders in accordance with law. Eventually, as has been stated
earlier, the contract was terminated.
5. The said order of termination was assailed in WP(C) No. 22541 of
2013. The learned Single Judge noted the facts and took note of prayer no.
(c) which was for issue of a writ of mandamus or any other appropriate
writ, order or direction directing the respondents to take steps for
measurement of the work already completed by him and making corresponding
entries in the measurement book. The said prayer was acceded to by the
counsel for the State of Kerala and accordingly the learned Single Judge
directed measurement of the work to be completed effecting necessary
entries in the measurement book before finalization of the tender
proceedings, if any, in respect of balance work. The learned Single Judge
had also directed that the measurements should take place after notice to
the contractor.
6. The aforesaid order was assailed in the writ appeal. When the appeal
was listed for admission, the Appellate Bench, on 17.12.2013, passed the
following order:-
“We heard the learned counsel for the appellant at length. Ext. P15 order
shows that more than 50% of the work remains to be completed. The learned
counsel for the appellant referred to paragraph 10 of the counter affidavit
filed by the first respondent dated 15.3.2013 in W.P.(C) No. 5690 of 2013
(another writ petition filed by the appellant) wherein it is stated that
“over all 70% of total works completed so far”. The learned counsel for
the appellant submitted that nearly 90% of the work was over and the work
could not be completed within the extended period since the Department did
not fulfil certain mandatory requirements in order to complete the work and
since a stop memo was issued even before the expiration of the extended
period.
2. Learned counsel for the appellant submitted that the appellant is
prepared to take out a commission to substantiate the contention that 90%
of the work is over. Learned Government pleader sought for a short time to
get instructions. Since the matter is urgent and since the courts are
going to be closed on 20.12.2013, we are inclined to grant only a day’s
time to get instructions on the prayer made by the appellant that a
commissioner may be appointed.”
7. On the adjourned date, the counsel for the State submitted that the
respondent had no objection for appointment of Commissioner. On the
aforesaid basis, the
Division Bench appointed two Advocates as joint commissioners to inspect
the site and to submit the report in respect of the disputed questions
mentioned in the order dated 17.12.2013. Thereafter, the Court passed the
following order:-
“The Commissioners would be free to seek the help of a competent Engineer
for the purpose of enabling them to prepare a report which would throw
light on the disputed question involved in the case. The appellant as well
as respondents would provide all assistance to the Commissioners for
execution of their work. The Commissioners would be entitled to call for
any record from the appellant as well as respondents 3 and 4 for the
purpose of executing the work entrusted to them.”
8. The Commission appointed by the Appellate Bench took assistance of
one Retired Assistant Executive Engineer, PWD who submitted a report to the
commissioners, which was annexed to the Commission’s report. We need not
refer to the report which has been reproduced by the impugned order.
However, the Engineer who assisted the Commission, in his report under the
heading ‘Details of work done’, has stated thus:-
“Anyhow the contractor has executed a minimum amount of work so far up to
the commission, inspection date of 3.1.2014 of Rs.2,27,90,383/- which is
72.24% of the revised estimate and 97.09% of the original work (Estimate
PAC). There are some minor damages in the completed portion of BT surface
and white topped portion (concrete road) and the general condition of the
whole work executed by the contractor is satisfactory. A detailed item
wise statement is prepared and appended herewith for perusal as Annexure
A.”
9. The Appellate Bench on the basis of the said report came to hold that
the order of termination was founded on erroneous facts inasmuch as the
competent authority had opined that more than 50% of the work remained to
be done. The Division Bench opining that as there was a factual defect,
which was evident from the commission’s report, the order of termination of
contract was liable to be quashed and accordingly axed the same. After
quashing the same, the High Court directed the Superintending Engineer,
PWD, (Roads and Bridges) to consider and dispose of the matter afresh after
affording an opportunity to the contractor of being heard. It also
directed that the Commission’s report and the Engineer’s report and the
accounts shall be produced by the contractor before the competent authority
who shall take the same into account before taking final decision in the
matter. After so directing, the High Court eventually ruled that:
“Since Exhibit P15 order is passed on incorrect data and since that data
was found to be incorrect by appointing Joint Commissioners, we are of the
view that the Government should bear the expenses of the Commissioners and
expenses of the Engineer in submitting the reports. Before conducting a
final hearing, a sum of Rs.40,000/- shall be paid by the first respondent
to the appellant/writ petitioner. Taking into account the work done by the
Engineer, we think that an additional remuneration of Rs.5,000/- should be
paid to the Engineer. The appellant/writ petitioner shall pay the said
amount of Rs.5,000/- to the Engineer within 15 days and proof thereof shall
be produced by the appellant before this Court.”
10. We have heard Mr. Ramesh Babu M.R., learned counsel for the
appellants and Mr. K. Parmeshwar, learned counsel for the respondent.
11. The thrust of the matter is whether the Appellate Bench in intra-
court appeal arising from a petition under Article 226 of the Constitution,
should have carried out the exercise that it has done and eventually
quashed the order terminating the contract by the competent authority of a
Department on the ground that it was passed on erroneous facts, for the
respondent contractor, as per the Commission’s report, had done higher
percentage of work. We would not like to comment anything on the order
passed by the learned Single Judge as that was not challenged by the State
before the Appellate Court in appeal. The learned Single Judge had
directed measurement to be carried out prior to floating of tender for the
balance work. That direction, as is evident, has been accepted by the
State.
12. As the factual narration would reveal, the respondent has been
invoking the jurisdiction of the High Court under Article 226 of the
Constitution on various occasions challenging every action which pertain to
extension of time, denial of revised estimate by the State Government and
many other facets of that nature and the High Court, we must say, has been
generously passing orders for consideration by the appropriate authority,
for grant of opportunity of being heard to the contractor and to consider
his representation in accordance with law. This kind of orders in a
contractual matter, in our considered view, is ill-conceived. They not
only convert the controversy to a disturbing labyrinth, but encourage
frivolous litigation. The competent authority might have mentioned that
more than 50% work remained to be done but that should not have prompted
the Appellate Bench hearing the intra-court appeal to appoint a Commission
of two Advocates and granting them liberty to take assistance of a
competent Engineer. As the report would show, the Commission of two
Advocates have taken assistance of a retired Assistant Executive Engineer
and submitted the report. Though, learned counsel for the State had not
objected to the same, yet we really fail to fathom how a writ jurisdiction
can be extended to cause a roving enquiry through a Commission and rely on
the facts collected without granting opportunity to the State to file
objections to the same and in the ultimate eventuate, cancel the order of
termination of contract. What precisely was the quantum of work done and
whether there had been a breach by the owner or the contractor, are
required to be gone into by the appropriate legal forum.
13. A writ court should ordinarily not entertain a writ petition, if
there is a breach of contract involving disputed questions of fact. The
present case clearly indicates that the factual disputes are involved. In
State of Bihar v. Jain Plastics and Chemicals Ltd.[1], a two-Judge Bench
reiterating the exercise of power under Article 226 of the Constitution in
respect of enforcement of contractual obligations has stated:-
“It is to be reiterated that writ petition under Article 226 is not the
proper proceedings for adjudicating such disputes. Under the law, it was
open to the respondent to approach the court of competent jurisdiction for
appropriate relief for breach of contract. It is settled law that when an
alternative and equally efficacious remedy is open to the litigant, he
should be required to pursue that remedy and not invoke the writ
jurisdiction of the High Court. Equally, the existence of alternative
remedy does not affect the jurisdiction of the court to issue writ, but
ordinarily that would be a good ground in refusing to exercise the
discretion under Article 226.”
In the said case, it has been further observed:-
“It is true that many matters could be decided after referring to the
contentions raised in the affidavits and counter-affidavits, but that would
hardly be a ground for exercise of extraordinary jurisdiction under Article
226 of the Constitution in case of alleged breach of contract. Whether the
alleged non-supply of road permits by the appellants would justify breach
of contract by the respondent would depend upon facts and evidence and is
not required to be decided or dealt with in a writ petition. Such seriously
disputed questions or rival claims of the parties with regard to breach of
contract are to be investigated and determined on the basis of evidence
which may be led by the parties in a properly instituted civil suit rather
than by a court exercising prerogative of issuing writs.”
14. In National Highways Authority of India v. Ganga Enterprises[2], the
respondent therein had filed a writ petition before the High Court for
refund of the amount. The High Court posed two questions, namely, (a)
whether the forfeiture of security deposit is without authority of law and
without any binding contract between the parties and also contrary to
Section 5 of the Contract Act; and (b) whether the writ petition is
maintainable in a claim arising out of breach of contract. While dealing
with the said issue, this Court opined that:-
“It is settled law that disputes relating to contracts cannot be agitated
under Article 226 of the Constitution of India. It has been so held in the
cases of Kerala SEB v. Kurien E. Kalathil[3], State of U.P. v. Bridge &
Roof Co. (India) Ltd.[4] and Bareilly Development Authority v. Ajai Pal
Singh[5]. This is settled law. The dispute in this case was regarding the
terms of offer. They were thus contractual disputes in respect of which a
writ court was not the proper forum. Mr Dave, however, relied upon the
cases of Verigamto Naveen v. Govt. of A.P.[6] and Harminder Singh Arora v.
Union of India[7]. These, however, are cases where the writ court was
enforcing a statutory right or duty. These cases do not lay down that a
writ court can interfere in a matter of contract only. Thus on the ground
of maintainability the petition should have been dismissed”.
15. Having referred to the aforesaid decisions, it is obligatory on our
part to refer to two other authorities of this Court where it has been
opined that under what circumstances a disputed question of fact can be
gone into. In Gunwant Kaur v. Municipal Committee, Bhatinda[8], it has
been held thus:-
“14. The High Court observed that they will not determine disputed question
of fact in a writ petition. But what facts were in dispute and what were
admitted could only be determined after an affidavit-in-reply was filed by
the State. The High Court, however, proceeded to dismiss the petition in
limine. The High Court is not deprived of its jurisdiction to entertain a
petition under Article 226 merely because in considering the petitioner’s
right to relief questions of fact may fall to be determined. In a petition
under Article 226 the High Court has jurisdiction to try issues both of
fact and law. Exercise of the jurisdiction is, it is true, discretionary,
but the discretion must be exercised on sound judicial principles. When the
petition raises questions of fact of a complex nature, which may for their
determination require oral evidence to be taken, and on that account the
High Court is of the view that the dispute may not appropriately be tried
in a writ petition, the High Court may decline to try a petition. Rejection
of a petition in limine will normally be justified, where the High Court is
of the view that the petition is frivolous or because of the nature of the
claim made dispute sought to be agitated, or that the petition against the
party against whom relief is claimed is not maintainable or that the
dispute raised thereby is such that it would be inappropriate to try it in
the writ jurisdiction, or for analogous reasons.
15. From the averments made in the petition filed by the appellants it is
clear that in proof of a large number of allegations the appellants relied
upon documentary evidence and the only matter in respect of which conflict
of facts may possibly arise related to the due publication of the
notification under Section 4 by the Collector.
16. In the present case, in our judgment, the High Court was not justified
in dismissing the petition on the ground that it will not determine
disputed question of fact. The High Court has jurisdiction to determine
questions of fact, even if they are in dispute and the present, in our
judgment, is a case in which in the interests of both the parties the High
Court should have entertained the petition and called for an affidavit-in-
reply from the respondents, and should have proceeded to try the petition
instead of relegating the appellants to a separate suit.”
[Emphasis added]
16. In ABL International Ltd. v. Export Credit Guarantee Corpn. of India
Ltd.[9], a two-Judge Bench after referring to various judgments as well as
the pronouncement in Gunwant Kaur (supra) and Century Spg. And Mfg. Co.
Ltd. v. Ulhasnagar Municipal Council[10], has held thus:-
“19. Therefore, it is clear from the above enunciation of law that merely
because one of the parties to the litigation raises a dispute in regard to
the facts of the case, the court entertaining such petition under Article
226 of the Constitution is not always bound to relegate the parties to a
suit. In the above case of Gunwant Kaur this Court even went to the extent
of holding that in a writ petition, if the facts require, even oral
evidence can be taken. This clearly shows that in an appropriate case, the
writ court has the jurisdiction to entertain a writ petition involving
disputed questions of fact and there is no absolute bar for entertaining a
writ petition even if the same arises out of a contractual obligation
and/or involves some disputed questions of fact.
xxxxx xxxxx xxxxx
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.
While laying down the principle, the Court sounded a word of caution
as under:-
“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[11].) 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”.
17. It is appropriate to state here that in the said case, the Court
granted the relief as the facts were absolutely clear from the documentary
evidence brought which pertain to interpretation of certain clauses of
contract of insurance. In that context, the Court opined:-
“.... The terms of the insurance contract which were agreed between the
parties were after the terms of the contract between the exporter and the
importer were executed which included the addendum, therefore, without
hesitation we must proceed on the basis that the first respondent issued
the insurance policy knowing very well that there was more than one mode of
payment of consideration and it had insured failure of all the modes of
payment of consideration. From the correspondence as well as from the terms
of the policy, it is noticed that existence of only two conditions has been
made as a condition precedent for making the first respondent Corporation
liable to pay for the insured risk, that is: (i) there should be a default
on the part of the Kazak Corporation to pay for the goods received; and
(ii) there should be a failure on the part of the Kazakhstan Government to
fulfil their guarantee”.
And it eventually held:-
“..... We have come to the conclusion that the amended clause 6 of the
agreement between the exporter and the importer on the face of it does not
give room for a second or another construction than the one already
accepted by us. We have also noted that reliance placed on sub-clause (d)
of the proviso to the insurance contract by the Appellate Bench is also
misplaced which is clear from the language of the said clause itself.
Therefore, in our opinion, it does not require any external aid, much less
any oral evidence to interpret the above clause. Merely because the first
respondent wants to dispute this fact, in our opinion, it does not become a
disputed fact. If such objection as to disputed questions or
interpretations is raised in a writ petition, in our opinion, the courts
can very well go into the same and decide that objection if facts permit
the same as in this case”.
18. In this regard, a reference to Noble Resources Ltd. v. State of
Orissa and Another[12] would be seemly. The two-Judge Bench referred to
the ABL International (supra), Dwarkadas Marfatia & Sons v. Board of
Trustees, Port of Bombay[13], Mahabir Auto Stores v. Indian Oil Corp.[14]
and Jamshed Hormusji Wadia v. Board of Trustees, Port of Mumbai[15] and
opined thus:-
“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 this Court in ABL International Ltd. 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[16] and G.B. Mahajan v. Jalgaon Municipal
Council[17].)”
19. Thereafter, the court proceeded to analyse the facts and came to hold
that certain serious disputed questions of facts have arisen for
determination and such disputes ordinarily could not have been entertained
by the High Court in exercise of its power of judicial review and
ultimately the appeal was dismissed.
20. We have referred to the aforesaid authorities to highlight under what
circumstances in respect of contractual claim or challenge to violation of
contract can be entertained by a writ court. It depends upon facts of each
case. The issue that had arisen in ABL International (supra) was that an
instrumentality of a State was placing a different construction on the
clauses of the contract of insurance and the insured was interpreting the
contract differently. The Court thought it apt merely because something is
disputed by the insurer, it should not enter into the realm of disputed
questions of fact. In fact, there was no disputed question of fact, but it
required interpretation of the terms of the contract of insurance.
Similarly, if the materials that come on record from which it is clearly
evincible, the writ court may exercise the power of judicial review but, a
pregnant one, in the case at hand, the High Court has appointed a
Commission to collect the evidence, accepted the same without calling for
objections from the respondent and quashed the order of termination of
contract. The procedure adopted by the High Court, if we permit ourselves
to say so, is quite unknown to exercise of powers under Article 226 in a
contractual matter. We can well appreciate a Committee being appointed in
a Public Interest Litigation to assist the Court or to find out certain
facts. Such an exercise is meant for public good and in public interest.
For example, when an issue arises whether in a particular State there are
toilets for school children and there is an assertion by the State that
there are good toilets, definitely the Court can appoint a Committee to
verify the same. It is because the lis is not adversarial in nature. The
same principle cannot be taken recourse to in respect of a contractual
controversy. It is also surprising that the High Court has been
entertaining series of writ petitions at the instance of the respondent,
which is nothing but abuse of the process of extraordinary jurisdiction of
the High Court. The Appellate Bench should have applied more restraint and
proceeded in accordance with law instead of making a roving enquiry. Such
a step is impermissible and by no stretch of imagination subserves any
public interest.
21. Consequently, the appeal is allowed and the judgment and order passed
by the Appellate Bench is set aside. However, in the facts and
circumstances of the case, we refrain from imposing costs.
.............................J.
[Dipak Misra]
..........................., J.
[Prafulla C. Pant]
New Delhi
August 14, 2015
-----------------------
[1] (2002) 1 SCC 216
[2] (2003) 7 SCC 410
[3] (2000) 6 SCC 293
[4] (1996) 6 SCC 22
[5] (1989) 2 SCC 116
[6] (2001) 8 SCC 344
[7] (1986) 3 SCC 247
[8] (1969) 3 SCC 769
[9] (2004) 3 SCC 553
[10] (1970) 1 SCC 582
[11] (1998) 8 SCC 1
[12] (2006) 10 SCC 236
[13] (1989) 3 SCC 293
[14] (1990) 3 SCC 752
[15] (2004) 3 SCC 214
[16] (2005) 6 SCC 657
[17] (1991) 3 SCC 91
-----------------------
21
