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2008 DIGILAW 1046 (ORI)

KAZI NARUL ISLAM v. STATE OF ORISSA

2008-11-21

I.M.QUDDUSI, S.R.SINGHARAVELU

body2008
JUDGMENT : S.R. Singharavelu, J. - Petitioner is the proprietor of M/ s Eureka Canvas Company Limited, a S.S.I. Unit, registered with National Small Industries Corporations Limited. The Company manufactures Tarpaulins and deals with high density polythene ethylene and polythene tarpaulins, durry etc. 2. In October, 1999 there was a cyclone devastating the coastal districts of Orissa rendering several lakhs of people homeless. Sri R.N. Das (O.P. No. 5) at the relevant time was the Managing Director of Orissa Small Scale Industries Corporation Limited (in short, "OSIC" O.P. No. 4). 3. On 1.11.1999 O.P. No. 5 on behalf of O.P. No. 4 addressed M/s. Siltop Chemicals Limited, Mumbai, presently known as Supreme Industries Limited (O.P. No. 6) to supply silproof for relief of cyclone affected people of Orissa. After vivid discussion a request was made to supply 50 Mtrs X.12 ft. 3906 pieces ' Rs. 2575 per ex-factory at Ahmadabad. 4. O.P. No. 5 further directed O.P. No. 6 to dispatch the materials for appropriate conversion by Petitioner's firm (M/s. Eureka Canvas Company). He further directed that the Petitioner's firm would convert the sheets to their requirement and deliver the same at the cyclone affected areas and it was made clear that the Petitioner's firm for doing the above job shall be paid for the extra service rendered by them. It was also intimated by a letter that the OSIC Limited shall claim 20% towards its service charges and a copy of the above hand written letter was marked to the Petitioner, who was the authorized main dealer of O.P. No. 6. 5. On 16.11.1999, the Managing Director of OSIC Limited (O.P. No. 5) addressed the Petitioner's firm intimating that they had placed P.O. Nos. 64 dated 16.11.1999 on the principal for supply of silpaulin tarpaulin to the cyclone affected people of Orissa and that the Petitioner's firm shall be responsible for receiving the stock and make onward movement to the destination of Special Relief Commissioner, Orissa under the following terms and conditions: (i) As per requirement of SRC you will transport the material to different cyclone affected areas of coastal districts and deliver to the concerned district magistrate after due conversion of the material into small pieces of tarpaulin. (ii) You will be paid for covering all local cost and incidental expenses, which will not exceed Rs. 19.07 paise per sqm. (ii) You will be paid for covering all local cost and incidental expenses, which will not exceed Rs. 19.07 paise per sqm. after payment made to the company towards cost of materials. This includes octroi charges and local distribution and conversion as per requirement of users. (iii) All incidental expenses including travelling expenses of OSIC officials relating to the above supply to the destination points shall be to your account. 6. After execution of the work on 7.3.2000, the Petitioner's firm submitted their bill to O.P. No. S for overriding commission towards supply of silpaulin tarpaulins of different varieties. The bill amount was for a sum of Rs. 80,22,746.00. 7. Though the Petitioner had effectively executed the work entrusted by the O. Ps., the Orissa Small Industries Corporation had to the detriment of Petitioner deducted Rs. 1,64,983/ -towards LC charges, loss of interest on FDR and DD commission incurred by it on payments made to M/s. Siltop Chemicals Ltd. Those charges were never agreed to be paid by Petitioner. 8. Similarly, notional interest (at the rate of interest charged by SBI on Cash Credit limit of OSIC) on the advance payment made to M/s. Siltop Chemicals Ltd., Mumbai was also no way connected with the Petitioner's firm and therefore, deduction on the above two heads from the Petitioner's bill is incorrect. After having unilaterally deducted, the O.P. No. 5 again wrongly stated that the net amount (after deduction) of Rs. 50,61,191 is adjusted against the advance amount. 9. On the aforesaid pleadings the Petitioner has prayed the following: To issue writ/direction/order to the Opposite Parties to show cause as to why they shall not pay Rs. 40,96,311/- plus Rs. 1,64,983/- totally amounting to Rs. 42,61,294/?to the Petitioner which they have illegally, arbitrarily and capriciously deducted from the Petitioner's bill within a particular time frame; and if the Opposite Parties fail to show cause or show insufficient cause then issue writ in the nature of Mandamus calling upon the Opposite Parties to pay the above amount to the Petitioner within a particular time frame and pass such order/direction/to pay the Petitioner interest on the withheld amount at the bank rate from the date of detention till the date of actual payment. 10. In the counter affidavit filed on behalf of O.P. No. 4 it was admitted regarding the fact of placing orders on O.P. No. 4 by the State Govt. 10. In the counter affidavit filed on behalf of O.P. No. 4 it was admitted regarding the fact of placing orders on O.P. No. 4 by the State Govt. of Orissa. Accordingly, O.P. No. 4 placed an Order Dated 1.11.1999 on M/s. Siltop Chemicals Ltd., Calcutta for supply of 3906 pieces of silproof polythene of 12 X 50 meter size. 11. An Order Dated 1.11.1999 was issued in favour of M/s. Siltop Chemicals Ltd., Calcutta (O.P. No. 6) to supply some extra materials, i.e., silproof light weight tarpaulin of 3037 pieces, along with materials mentioned in the Order Dated 1.11.1999. The standard, quantity and rate, was clearly stipulated in the said Order Dated 1.11.1999 besides the following: (a) xxx (b) xxx (c) The consignment should be routed through M/ s Eureka Canvass Company (Petitioner who was authorized dealer of M/s Siltop Chemicals Ltd. (d) As agreed the OSIC shall be entitled to 2% service charges as sole agent of M/s Siltop Chemicals Ltd. for government supplies in Orissa.' 12. It is not a fact that as per orders the Petitioner's firm was required to cut the rolls into sizes specified by OSIC Ltd. and then transport the materials from the godown of the Special Relief Commissioner, Bhubaneswar to different cyclone affected districts. 13. It was further mentioned in the Court that O.P. No. 4 had every right to deduct Rs. 1,64,983/- from the Petitioner's firm towards L.C. charges, loss of interest on TDR as well as DD commission incurred by O.P. No. 4 on payments made to M/s Siltop Chemicals Ltd. 14. It is also not a fact that the interest charge by the SBI for cash credit limit of O.P. No. 4 for the advance given to M/s Siltop Chemicals Ltd. cannot be charged to the Petitioner or its Firm. 15. A sum of about Rs. 6.21 crores was paid to MI s Siltop Chemicals Ltd. who was the principal of the Petitioner's firm. The said amount Rs. 6.21 crores was paid by borrowing the funds from different sources by the a SIC. The interest lost was met by O.P. No. 4 out of their mere margin of Rs. 37,000,00/- against their 80% involvement of man power resources and capital. 16. It is not a fact that, (i) a sum of Rs. 1,18,835/? The said amount Rs. 6.21 crores was paid by borrowing the funds from different sources by the a SIC. The interest lost was met by O.P. No. 4 out of their mere margin of Rs. 37,000,00/- against their 80% involvement of man power resources and capital. 16. It is not a fact that, (i) a sum of Rs. 1,18,835/? towards L.C. charges opened in favour of M/s Siltop Chemical Ltd. and (ii) a sum of Rs. 40,96,311/ - towards notional interest on advance made to Siltop and (iii ) a sum of Rs. 46,146/? towards draft commission prepared in favour of M/s Siltop, amounting to Rs. 42,61,294/- were deducted from the bills raised by the Petitioner for the execution of work entrusted to him arbitrarily, illegally and malafidely. 17. At no point of time any promise was made by O.P. No. 4 to the Petitioner for the payment of the amount in question which is the subject matter of Writ Petition. Thus, the Writ Petition is not maintainable and liable to be dismissed. 18. The point for consideration is (i) whether the Writ Petition is maintainable? and (ii) whether the Writ Petitioner is entitled to the relief sought for and, if so, on what grounds? 19. The prayer of the Writ Petitioner ostensibly is to restrain the Opposite Parties, namely, State of Orissa and Ors. from deduction of a sum of Rs. 42,61,294, which according to the Writ Petitioner, is arbitrary and not also in consonance with the agreed terms and conditions between the parties. 20. The Learned Counsel for the Opposite Parties at the outset submitted that when the prayer in a Writ Petition touches the subject matter of contract between the parties then Writ Petition is not maintainable. In this connection, the unreported judgment dated 15.12.1999 of the Division Bench of this Court in OJC Nos. 4065 of 1999 (M/s. Sethi Transport, Madhupatna, Cuttack v. The Commissioner-cum-Secretary to Govt. of Orissa and Anr. with an application under Article 226 of the Constitution of India was relied upon. In this connection, the unreported judgment dated 15.12.1999 of the Division Bench of this Court in OJC Nos. 4065 of 1999 (M/s. Sethi Transport, Madhupatna, Cuttack v. The Commissioner-cum-Secretary to Govt. of Orissa and Anr. with an application under Article 226 of the Constitution of India was relied upon. As the Writ Petition in that case was for clearance of the bills of the Petitioner's firm said to have been executed in terms of the contract entered into between the Petitioner and Orissa State Commercial Transport Corporation between 1981 and 1983, it was held that any dispute relating to interpretation of the terms and conditions of a contract or any over due amount arising there from has to be worked out in the common law forum and an aggrieved party is not entitled to approach the writ Court for enforcement of a contractual obligation for payment of outstanding bills. It was further held that the High Court would not entertain Writ Petition under Article 226 of the Constitution to enforce a contractual obligation pure and simple. 21. Arriving at such conclusion in the above cited case reliance was placed upon a Supreme Court Case law in State of U.P. and others Vs. Bridge and Roof Co. (India) Ltd., In that case, the Bridge & Roof Company (India) Ltd., a Public Sector Corporation entered with a works contract with the Government of Uttar Pradesh for rehabilitation and improvement of certain stretch of road in the State of Uttar Pradesh. The tenders were opened and the Respondent's tender was accepted. The dispute was with regards to certain payment which the Respondent claimed to be due whereas the Appellant, Government of Uttar Pradesh took the plea that it was entitled to retain. The Apex Court held that that the remedy by way of a Writ Petition adopted by the Respondent is misconceived. It was further held that if any amount was wrongly withheld by the Government the remedy of the Respondent is to raise a dispute as provided by the contract or to approach the Civil Court according to law. The Apex Court held that that the remedy by way of a Writ Petition adopted by the Respondent is misconceived. It was further held that if any amount was wrongly withheld by the Government the remedy of the Respondent is to raise a dispute as provided by the contract or to approach the Civil Court according to law. In paragaraph 18 of the said Judgment, the Hon'ble Apex Court observed as follows: Accordingly, it must be held that the Writ Petition filed by the Respondent for the issuance of a writ of mandamus restraining the Government from deducting or withholding a particular sum, which according to the Respondent is payable to it under the contract, was wholly misconceived and was not maintainable in law. (See the decision of this Court in Assistant Excise Commissioner and Others Vs. Issac Peter and Others where the law on the subject has been discussed fully). The Writ Petition ought to have been dismissed on this ground alone. 22. Yet another judgment In State of Himachal Pradesh Vs. Raja Mahendra Pal and Others, was also relied upon in the judgment of the above mentioned unreported case law. In the said case law in State of H.P. v. Rajamahandra Pal the Hon'ble Apex Court laid down that High Court would not ordinarily entertain a Writ Petition under Article 226 to enforce a contractual right, particularly when an efficacious alternative remedy ids available. 23. It is on this principle laid down by the Apex Court observation was made in the above cited unreported case law that in order to enforce a contractual obligation, no writ can be maintained. In further support of the above submission made by the Learned Counsel for the Opposite Parties, reliance was also placed on a case law in Defense Enclave Residents Society Vs. State of U.P. and Others, wherein the following was observed:? Thus what is projected before the Court, though under the camouflage of an infringement of fundamental right, is really a contractual dispute pure and simple. As to whether there is a right reserved in the second Respondent to pass on the additional liability to the purchasers, is to be determined by the terms of the contract between the parties. Thus what is projected before the Court, though under the camouflage of an infringement of fundamental right, is really a contractual dispute pure and simple. As to whether there is a right reserved in the second Respondent to pass on the additional liability to the purchasers, is to be determined by the terms of the contract between the parties. Though a model sale deed has been placed on record, it is necessary that the facts in each case have to be investigated, the terms of the contract between the second Respondent and the allottee determined on evidence and construed, before the dispute can be satisfactorily adjudicated. 24. The Learned Counsel for the Petitioner argued that the bar for a Writ Petition regarding the enforcement of contractual obligation will be available only when the subject matter of the writ was regarding a contract pure and simple. It was further argued that when another party and especially a Government acted in an unfair manner in the camouflage of a contract the terms of which would explicitly show undue enrichment for the Government then in such an event when the Government does something unilaterally without any support of the terms of contract and when it does anything away and apart from the terms of contract, then naturally a writ Court will have jurisdiction. While arguing this, the Learned Counsel had distinguished the observation made in the unreported case law in M/s. Sethi Transport (supra) which was made in a particular significant circumstance, namely, (i) neither the agreement nor the work order was brought on record in that case; and (ii) there was a dispute about the acceptability of the acknowledgment of one of the parties beyond the period of limitation. It is, therefore, there was a substantial dispute that arose in the facts and circumstances of the above cited unreported case. Even in the other case laws relied on in the judgment of the said case there was substantial factual dispute surrounding the terms of contract the record of which in some cases was not at all produced. It is, therefore, production of the agreement and evidence subject to relevancy and admissibility was required with other disputed question of facts regarding limitation. It is, therefore, in those cases it was held that in such disputed question of facts when alternative remedy was available in common law Court writ jurisdiction may not be applicable. It is, therefore, production of the agreement and evidence subject to relevancy and admissibility was required with other disputed question of facts regarding limitation. It is, therefore, in those cases it was held that in such disputed question of facts when alternative remedy was available in common law Court writ jurisdiction may not be applicable. 25. The Learned Counsel for the Petitioner further submitted that in this particular case the terms of agreement was very well mentioned in the records as well as pleadings. The counter affidavits of the Opposite Parties do run to state about the terms of the agreement whereby the consensus regarding the terms and conditions in respect of the contract are as follows:? (i) xxx (ii) xxx (iii) As per requirement of SRC, you will transport the material to different cyclone affected areas of coastal districts and deliver to the concerned district magistrates after due conversion of the material into small pieces of tarpaulin. You will be paid transportation charges as per SRC specification from SRC godown to the districts. You will also collect utilization certificate from the concerned district magistrates for your central excise purpose. (iv) You will be paid for covering all local cost and incidental expenses, which will not exceed Section 19.07 paise per sqm. After payment made to the company towards cost of materials. This includes octroi charges and local distribution and conversion as per requirement of users. (v) All incidental" expenses including traveling expenses of OSIC officials relating to the above supply to the destination points shall be to your account." 26. It was pointed out by Learned Counsel for the Petitioner that nowhere in the agreement the Opposite Parties were entitled to deduct a sum of Rs. 42,61,294/-. The reason given for such deduction are (i) A sum of Rs. 1,18,835/ - towards L.C charges against L.C in favour of M/s. Siltop Chemicals Ltd; and (ii) a sum of Rs. 40,96,311/- towards notional interest on advance made to M/s. Siltop Chemicals Ltd. 27. It was pointed out that these two above items were not covered in the contract and therefore the deduction made by the Government of Orissa is arbitrary. 28. 40,96,311/- towards notional interest on advance made to M/s. Siltop Chemicals Ltd. 27. It was pointed out that these two above items were not covered in the contract and therefore the deduction made by the Government of Orissa is arbitrary. 28. Even though the terms of contract contains certain promises regarding conversion of materials into small pieces of Tarpaulins a dispute arose over such terms of contract when once O.P. No. 4 preferred to say that on actuality there was no work done. Thus, when there is a deviation from the terms of contract the question arises as to why O.P. No. 4 should be directed to pay for a work, which has not been actually done by the Petitioner. In this way, there is a factual dispute that had arisen in this matter. 29. It may be true that the power of High Court under Article 226 of the Constitution is wide and expansive. It is equally true that the right to prejudicial review is a basic structure of the Constitution and there is catena of decisions on this aspect starting from Smt. Indira Nehru Gandhi Vs. Shri Raj Narain and Another Bomai's case, 1994 AIR SCW 2946 and Life Insurance Corporation of India and Others Vs. Smt. Asha Goel and Another. However, a self imposed restriction was consistently followed by High Courts in not entertaining Writ Petitions filed for enforcement of purely contractual right of obligation which involved disputed question of facts. This was so held in Air India Statutory Corporation, etc. Vs. United Labour Union and others [overruled], (Paragraphs 59 to 61). This was so held because it is very much necessary to enquire into the facts for determination of which it may become necessary to record oral evidence. 30. The factual aspect of this case as seen from the pleadings and counter pleadings quietly involves disputed question of facts and in this circumstance it is very difficult to accept about the maintainability of a Writ Petition like the instant one. 31. 30. The factual aspect of this case as seen from the pleadings and counter pleadings quietly involves disputed question of facts and in this circumstance it is very difficult to accept about the maintainability of a Writ Petition like the instant one. 31. The Learned Counsel for the Petitioner would again argue that where parties do tangently travel outside the ambit of terms of the agreement then it may be a case where no evidence would be required and writ courts do have long arms to reach justice, when it is felt that there was an undue attempt made on the side of the Respondents to enrich themselves even going away from the terms of the contract. He would cite the case in Mahabir Auto Stores and others Vs. Indian Oil Corporation and others, where contractual obligations were enforced under public law remedy of Article 226. Similar view was taken in Kumari Shrilekha Vidyarthi and Others Vs. State of U.P. and Others. The doctrine of fairness or duty to act fairly and reasonably was evolved in the case of Assistant Excise Commissioner and Others Vs. Issac Peter and Others, to ensure fair action where the function is administrative. But in this case even though there IS an ostensible unity of terms of agreement there is dispute in regard to the actuality of the work done in pursuance of such terms of contract. For example, when the contract involved cutting of Tarpaulins into sizes on certain wages it was disputed by O.P. No. 4 that such cutting was not at all effected. Act of reasonability and avoidance of undue enrichment will necessarily come into play when there are deviations in terms of contract while implementing the same in actuality. That reasonability will be determined only after assessing the disputed question of facts regarding the action that was done in actuality and in pursuance of any deviation of the contract, as the case may be. Therefore, this is not a case where doctrine of fairness alone will apply; nor it would be a case where enforcement of contractual obligations as such are involved. It is a case of disputed facts of actuality of implementation of the terms of contract which would require evidence and no writ will lie. In this view of the matter, the Writ Petition is not maintainable. 32. It is a case of disputed facts of actuality of implementation of the terms of contract which would require evidence and no writ will lie. In this view of the matter, the Writ Petition is not maintainable. 32. Coming to the factual aspect the prayer in the Writ Petition is against the deduction of Rs. 42,61,294/- from the bill of the Petitioner by O.P. No. 4, i.e., the Managing Director O.S.I.C. The break up figure of the above amount is as follows: Rs. 1,18,835/ - is towards L.C. charges against L.C. opened in favour of M/s. Siltop Chemicals Ltd.; a sum of Rs. 40,61,294/- towards notional interest on advance made to M/s. Siltop; and a sum of Rs. 46,146/- towards draft commission against draft prepared in favour of M/s Siltop. 33. This deductions, according to the Petitioner, is arbitrary and illegal. In this context, one should remember that there is no contra rejoinder to the following version found in the end of paragraph 9 of the counter affidavit of O.P. No. 4. "It is pertinent to mention here that the Petitioner's Firm has received net amount of Rs. 41,84,341/- towards their overriding commission for handling about 43 truck loads of Silpaulin for which gross profit is calculated Rs. 97,310/- per truck." 34. Since there is no rejoinder on this aspect it is made clear that the Petitioner received the above sum from O.P. No. 4. Therefore, the impugned deduction virtually is not going to affect or not affecting the Petitioner's claim. That is why in sub? paragraph 2 of paragraph 10 it has been mentioned in the counter affidavit of O.P. No. 4 as follows:? It is submitted that vide letter Nos. ECC?41/2000-01 dated 08-06-2000, the Eureka Canvas Company, the authorized dealer of M/ s. Siltop Chemicals Ltd. has intimated the Opposite Party No. 4 that their account has been settled and they have no claim with regard to supply of silpauline and has requested the Opposite Party No. 4 to return the Post Dated Cheques submitted before the opp. party No. 4 as a token security against payment of advance to them. This letter is marked as Annexure C/4. 35. This would probabilise the contention of O.P. No. 4 made in its counter affidavit (paragraph 10) that after having paid Rs. party No. 4 as a token security against payment of advance to them. This letter is marked as Annexure C/4. 35. This would probabilise the contention of O.P. No. 4 made in its counter affidavit (paragraph 10) that after having paid Rs. 6.21 crores to M/s. Siltop Chemicals Ltd. only upon borrowing the funds from different sources by the O.S.I.C., the interest loss could have been met by the latter out of their mere margin of Rs. 37 lakhs against their 800/0 involvement of manpower resources and capital. 36. As a mater of fact, the job was allegedly done by the staff of quality checking squad, climbing upon the truck and they were drawing a random piece from the truck for quality testing in the presence of supplier/truck driver. It was so alleged in paragraph 8 of the counter of O.P. No. 4. They have also mentioned therein that in the Order Dated 1.11.1999 (Annexure A/4) it was not so stipulated that the Petitioner was required to cut the rolls into sizes. It is also not a fact that Petitioner's Firm apart from the above work had to carry out additional work like unloading of each truck. 37. That is why it has been mentioned in the end of paragraph 9 of the counter that Rs. 41,84,341/- which was received by the Petitioner's Firm was towards their overriding commission for handling about 43 truck loads of Silpauline. 38. Thus, it has been very much made clear that payment of Rs. 41,84,341/- was already made to the Petitioner towards their overriding commission; that they are not entitled to anything for cutting the rolls into sizes; that the deduction will no way jeopardize the payment already made to the Petitioner; and O.P. No. 4 is justified in making deduction because of payment of Rs. 6.21 crores was made in advance to M/s. Siltop Chemicals Ltd. and that funds was raised by O.P. No. 4 only by borrowing upon interest; and therefore, the interest loss could not be made by O.P. No. 4, out of their mere margin of Rs. 37 lakhs. 39. Nowhere it is established by the Petitioner that they are entitled to any charges for cutting the Tarpaulin to sizes, apart from the overriding commission to which they have already been paid. 37 lakhs. 39. Nowhere it is established by the Petitioner that they are entitled to any charges for cutting the Tarpaulin to sizes, apart from the overriding commission to which they have already been paid. The deduction of the disputed amount may be causing inconvenience to M/s. Siltop Chemicals Ltd. and not to the Petitioner's Firm. 40. This Writ Petition is accordingly dismissed as not maintainable. I.M. Quddusi, J. 41. I agree. Final Result : Dismissed