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2007 DIGILAW 599 (JHR)

Mahabir Udyog v. Steel Authority Of India Ltd.

2007-07-27

N.N.TIWARI

body2007
JUDGMENT Narendra Nath Tiwari, J. 1. The controversies involved in 1 his matter admittedly arise out of a concluded contract between the parties. 2. Bokaro Steel Plant is a unit of Steel Authority of India Ltd. It will be hereinafter referred to as BSL, for short. 3. The BSL had invited tender for sale of 4000 M.T. Mixed Industrial Ferrous Scraps of Lot No. BY-3 from its Bursting Yard, being Tender Notice No. CD/III/MIFS/93-94. 4. Six tenderers responded to the said invitation. The Tender Committee considered the price quoted by the tenderers and recommended for negotiation with the tenderers for increasing the rate. 5. The highest price offered during the negotiation was Rs. 6,299/- per tonne by the petitioner, which was accepted, and the contract was awarded to the petitioner. 6. As per the terms of the contract the petitioner- M/s Mahavir Udyog was advised to deposit payment of first instalment within 15 days. The same was complied with by the petitioner and he was to make payment in eight equal instalments and lilt the materials accordingly. 7. The petitioner, after getting the sale order, wrote letter to the respondents, staling that they were not able to lift the material due to want of approach road and soft grass land at the site. 8. The petitioner requested the respondents to extend the delivery period and to reschedule the payment date. The respondents considered the same and allowed extension of the period up to 10 th November, 1993. 9. The petitioner failed to deposit the second instalment within the extended time. However, he paid the second instalment belatedly on 27 th November, 1993 with interest. 10. Since the second instalment was deposited belatedly, time for payment of third instalment had already expired on 25 th November, 1993. 11. The petitioner by his letter dated 30 th November, 1993 requested the respondents to give 15 days time to lift the materials against the payment of second instalment and assured that the payment of third instalment will be made with interest along with fourth instalment. 12. The request for extension of time was accepted and 15 days more lime was given for lifting the materials against the second instalment without changing the due date of payment of subsequent instalments. 13. 12. The request for extension of time was accepted and 15 days more lime was given for lifting the materials against the second instalment without changing the due date of payment of subsequent instalments. 13. The petitioner, however, by his letter dated 25 th January, 1994 Informed that there was no material available In Lot No. BY-3 for fourth instalment. With the said complain, the petitioner demanded refund of the security deposit along with cost of balance materials covered by the payment made by the petitioner. This letter gives rise to the controversies, culminating into the Instant writ petition. 14. According to the petitioner, on 27 th January, 1994, four trucks were loaded from Lot No. BY-3 out of third instalment materials and on that day, there was no material at the site. Even out of the said four trucks, three trucks were allowed to go out, but one truck was stopped by CISF in routine checking and on the next date, the said truck was unloaded on the direction of the concerned authority. 15. On the petitioners complain, the respondents constituted Six Members Committee for inspection of the material. The said Committee visited the spot and inspected the material and also inspected the material loaded on the truck. The petitioner claimed that the material loaded on the truck were not stainless Steel and were not authorised material and, therefore, on 28 th January, 1994, the truck was allowed to go out only after unloading the material. 16. Respondent No. 8-Deputy Chief Security, SAIL/BSL had lodged an F.I.R. and a case was registered under Sections 379/411 IPC by the local police. The petitioners two personnel were arrested. 17. The petitioner claimed that it was a case of false implication and malicious prosecution. The petitioner by his representation dated 15 th February, 1994 (Annexure-10) demanded for refund of the security deposit and the cost of the remaining material, which the petitioner could not lift. 18. The respondents denied the claim of the petitioner by their letter dated 10 th March, 1994, stating, inter alia, that the matter was referred to SSD and a joint inspection was carried out by them. They reported that enough material is available in the Lot for lifting, as specified in the Sale Order. 19. 18. The respondents denied the claim of the petitioner by their letter dated 10 th March, 1994, stating, inter alia, that the matter was referred to SSD and a joint inspection was carried out by them. They reported that enough material is available in the Lot for lifting, as specified in the Sale Order. 19. The petitioner was not satisfied and he again by his letter dated 17 th May, 1994 (Annexure-12) made request for refund of the security deposit and cost of material not available for lifting against the third instalment and the period of the Sale Order since expired. 20. When his request was not hooded upon, the petitioner filed writ petition, being C.W.J.C. No. 2058 of 1995(R). By order dated 16 th August, 1995, the said writ petition was disposed of directing the Respondent No. 2 to dispose of the petitioners representation 21. The Respondent No. 2 disposed of the petitioners representation by letter dated 19 th September, 1995 (Annexure-17), which has been sought to be quashed in this writ petition with further prayer for a direction on the respondents to refund the security and other deposit made by the petitioner with interest @ 24% per annum since 28 th January, 1994 till the date of payment. 22. The petitioner made the said prayer on the following grounds: i. The impugned order suffers from the vice of suppression of material facts regarding availability of quantity of material for lifting against fourth instalment and alleging delayed payment and breach of contract against the petitioner. ii. Criminal case was also based on false allegation and was tainted with mala fide with deliberate intention to frustrate the rightful claim of the petitioner. iii. No loss was caused to the respondents due to the delayed payment. iv. The petitioner is entitled for compensation/ damage from the respondents-authorities for withholding of the security deposit by them. v. The impugned letter is arbitrary, illegal and unjust. 23. A counter affidavit has been filed on behalf of the respondents, contesting the petitioners claim. 24. The respondents, infer alia, contended that the issues raised by the petitioner are of factual dispute, arising out of a concluded contractual right and obligations and the same cannot be adjudicated upon and decided in writ jurisdiction of this Court. 23. A counter affidavit has been filed on behalf of the respondents, contesting the petitioners claim. 24. The respondents, infer alia, contended that the issues raised by the petitioner are of factual dispute, arising out of a concluded contractual right and obligations and the same cannot be adjudicated upon and decided in writ jurisdiction of this Court. Clause 27 of the tender documents contains the arbitration clause and provides for efficacious alternative remedy, in the event of any difference or dispute arising out of or relating to the contract. Reference of the dispute or difference can be made by either party to the Sole Arbitrator to be appointed by the Managing Director of SAIL, BSL whose award shall be final, binding and conclusive for the parties. 25. The respondents also contended that the petitioners representation has been thoroughly considered. Proper opportunity of hearing was afforded to the petitioner and, thereafter, the decision has been taken, giving proper reasons. There is no arbitrariness and illegality in the impugned letter (Annexure-17). The petitioner has breached the terms of the contract, causing loss and damage to the respondents, and as per the terms of the contract, the respondents are entitled to claim damages against the petitioner. It is wholly incorrect to say that the petitioner has incurred loss and no loss has been caused to the respondents. The allegation of the petitioner that the material was not available at the site and for that reason, the petitioner was not required to make payment of fourth instalment has been denied. The respondents contended that the criminal case was subject to trial by the competent court. The same has got nothing to do with the breach of terms of the contract. It has been contended that the security deposits have been rightly forfeited for the breach of the terms of the contract. So far as other deposits are concerned, since the respondent is entitled for the loss and damage, the same after adjudication before the competent court can be adjusted and remaining amount can be paid upon such adjudication. 26. Mr. A. K. Sahani, learned Counsel, appearing on behalf of the petitioner, submitted that although" the controversy arises out of the concluded contract and since the impugned letter, contained in Annexure-17, being arbitrary and illegal, this Court can exercise its writ jurisdiction and decide the controversy. 26. Mr. A. K. Sahani, learned Counsel, appearing on behalf of the petitioner, submitted that although" the controversy arises out of the concluded contract and since the impugned letter, contained in Annexure-17, being arbitrary and illegal, this Court can exercise its writ jurisdiction and decide the controversy. Learned Counsel contended that the petitioner has not breached any term of the contract, rather the petitioner was prevented from complying with the terms due to unavailability of the materials in Lot No. BY-3 and subsequently by institution of criminal case against the petitioner. He further submitted that the respondents are instrumentality of the; welfare State and they have to act fairly and reasonably The decision taken by them is arbitrary and violative of Article 14 of the Constitution this Court can exercise its writ jurisdiction to protect the petitioner against arbitrary treatment meted out by the respondents. In support of his contention, learned Counsel referred to and relied upon decisions of the Supreme Court in the cases of Bareilly Development Authority and Anr. v. Ajay Pal Singh and Ors. And Central Inland Water Transport Corporation Ltd. and Anr. v. Brojo Nath Ganguly and Anr. . 27. Mr. G. M. Mishra, learned Counsel, appearing on behalf of the respondents, on the other hand, urged that the petitioner has raised factual dispute arising out of concluded contract which cannot be entertained and decided in writ jurisdiction. The decisions referred to and relied upon by the petitioner do not help the petitioner, rattier the said decisions support the grounds taken by the respondents. Learned Counsel submitted that he also relies upon the principles laid down by the Supreme Court in the case of Bareilly Development Authority and Anr. (Supra) as also in the case of Noble Resources Ltd. v. State of Orissa and Anr. . In addition thereto he also referred to and relied upon the decision of the Supreme Court in the case of State of Bihar and Ors. v. Jain Plastics and Chemicals Ltd. reported in 2002(1) JCR 303 (SC), wherein it has been held that writ is not the remedy for enforcing the contractual obligations. 28. Learned Counsel submitted that the writ petitioner has claimed the security amount and other compensation, which is a money claim, and the same also cannot be decided in writ jurisdiction of this Court. 28. Learned Counsel submitted that the writ petitioner has claimed the security amount and other compensation, which is a money claim, and the same also cannot be decided in writ jurisdiction of this Court. Learned Counsel placed reliance on the decision of this Court in the case of Hindustan Steel Works Construction v. State of Jharkhand and Ors. . 29. Learned Counsel submitted that in the contract, there is clear provision for referring disputes for arbitration and the petitioner has got efficacious alternative remedy to get the disputes referred to and decided by the arbitrator. Such dispute cannot be decided by the High Court in exercise of writ jurisdiction under Article 226 of the Constitution. Learned Counsel relied on a decision of the Allahabad High Court in the case of Govind Ram Sharma v. State and Ors. . 30. In Noble Resources Ltd. (Supra), the Apex Court has given a guideline for entertaining the writ petition in contractual matter. In Paragraph 28 of the decision, the Honble Supreme Court has concluded as follows: 28. 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. (Supra), each case, however, must be decided on its own facts. Public interest as noticed hereinbefore, may be one of the factors to exercise power of judicial review. In a case where a public law element is involved, judicial review may be permissible. [Se Binny Ltd. and Anr. v. V. Sadasivan and Ors. and G.B. Mahajan and Ors. v. Jalgaon Municipal Council and Ors. . 31. Learned Counsel, appearing on behalf of the petitioner, also heavily relied upon the decision of the Honble Supreme Court in State of U.P. and Anr. v. Johri Mal . Para-29 of the said decision records the following conclusion: It is well settled that while exercising the power of judicial review the Court is more concerned with the decision-making process than the merit of the decision itself. v. Johri Mal . Para-29 of the said decision records the following conclusion: It is well settled that while exercising the power of judicial review the Court is more concerned with the decision-making process than the merit of the decision itself. In doing so, if is often argued by the defender of an impugned decision that the Court is not competent to exercise its power when there are serious disputed questions of facts; when the decision of the Tribunal or the decision of the fact-finding body or the arbitrator is given finality by the statute which governs a given situation or which, by nature of the activity the decision-makers opinion on facts is final. But while examining and scrutinizing the decision-making process it becomes inevitable to also appreciate the facts of a given case as otherwise the decision cannot be tested under the grounds of illegality, irrationality or procedural impropriety. How far the court of judicial review can reappreciate the findings of facts depends on the ground of judicial review. For example, if a decision is challenged as Irrational, It would be well-nigh impossible to record a finding whether a decision is rational or irrational without first evaluating the facts of the case and coming to a plausible conclusion and then testing the decision of the authority on the touchstone of the tests laid down by the court with special reference to a given case. This position is well settled in the Indian Administrative Law Therefore, to a limited extent of scrutinizing the decision-making process, if is always open to the court to review the evaluation of facts by the decision-maker. 32. In the instant case, the petitioner has neither pleaded any public law elements not this is a rose; complaining against decision-making process. As such, the decision of the Supreme Court in Noble Resources Ltd. (Supra) or in The State of U.P. v. John Mal (Supra) have got no applicability to the facts of the instant case. 33. In Para-20 of the decision in the case of Bareilly Development Authority and Anr. (Supra), it has been held that when the contract entered into by the State is non-statutory and purely contractual the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines the rights and obligations of the parties inter-se. 33. In Para-20 of the decision in the case of Bareilly Development Authority and Anr. (Supra), it has been held that when the contract entered into by the State is non-statutory and purely contractual the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines the rights and obligations of the parties inter-se. In this sphere, the parties can only claim rights conferred upon them by the contract in the absence of any statutory obligations on the part of the authority in the said contractual field. In Para-21 of the said decision, it has been specifically slated that no writ or order can be issued under Article 226 of the Constitution of India so as to compel the authorities to remedy a breach of contract pure and simple. In the said paragraph, the Supreme Court has referred earlier decisions in Radhakrishna Agarwal v. State of Bihar , Premji Bhai Parmar v. Delhi Development Authority and D.F.O. v. Bishwanath Tea Co. Ltd. . These decisions are directly against the petitioner. 34. The decision of the Supreme Court in Central Inland Water Transport Corporation Ltd. and Anr. (Supra), though a landmark decision, has also got no relevance to the facts of the instant case. In the said decision, it has been held that a clause in a Contract of employment affecting large sections of the public is harmful and injurious to the public interest for its tends to create a sense of insecurity in the minds of those to whom it applies and consequently is against public good. Such a clause, therefore, is opposed to public policy and being opposed to public policy, it is void under Section 23 of the Indian Contract Act. 35. No such case is made out in the instant case, alleging the contract entered into between the parties opposed to public policy or being void under Section 23 of the Indian Contract Act. 36. It has been clearly held by the Apex Court that writ is not the remedy for enforcing contractual obligations as the rightful claim of the parties regarding breach of contract requires to be investigated and determined on the basis of evidence, which cannot be done in exercise of extra ordinary jurisdiction under Article 226 of the constitution of India. The said principle has been clearly explained in the case of State of Bihar and Ors. The said principle has been clearly explained in the case of State of Bihar and Ors. v. Jain Plastic and Chemicals Ltd. (Supra) and other cases. 37. In the instant case, admittedly, there was concluded contract and the petitioner has questioned the impugned letter (Annexure-17) by which the petitioner had demanded for refund of security deposit and other deposits. The respondents on the other hand contested the petitioners claim by taking the following grounds: i. Petitioners contention that he could not lift the material because of false criminal case is not factually correct. The petitioner did not lift the material in spite of extension of the date at his request up to 27 th January, 1994. ii. Petitioners contention that the issuance of PIMs delayed by BSL is not correct. iii. Petitioners contention that no interest was payable after 19 th February 1994 to the respondents is not correct. iv. Petitioners contention that conspiracy hatched by lodging false F.I.R., is baseless. v. Petitioners contention that the contract expired by efflux of lime is not correct, vi. Petitioners request for refund of the security deposit and other deposits is not tenable in view of the clear terms of the contract and the security deposit is liable to be forfeited for the breach of the terms and other deposits are liable to be adjusted after assessment of the loss and damages incurred by the respondents. 38. In order grant relief to the petitioner, as prayed for, all the said factual controversies to be adjudicated on the basis of the evidences. In view of the principles laid down by the Honble Supreme Court, the same cannot be adjudicated upon and decided in exercise of extra ordinary writ jurisdiction of this Court, under Article 226 of the Constitution of India. 39. For the reasons aforesaid, it is held that the relief(s) prayed for by the petitioner in this writ petition cannot be granted in exercise of writ jurisdiction. 40. This writ petition is, accordingly, dismissed. However, in the facts and circumstances of the case, there is no order as to costs.