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2011 DIGILAW 485 (CAL)

Pawan Trading Company v. Lieutenant Governor

2011-04-04

DEBASISH KAR GUPTA

body2011
JUDGMENT Debasish Kar Gupta, J. 1. THIS writ application is filed by the petitioner for a direction upon the respondents to act in accordance with the terms and conditions specified in the agreement dated May 22, 2008, executed by and between the petitioner No. 1 and the Administration of U.T. of Andaman and Nicohar Islands. 2. A notice inviting tender dated March 25, 2008 was issued by the respondent No.4 inviting tenders from suppliers having three years experience in the business/trade for supply of ration articles from April 2008 to December 2008 to Temporary Tsunami Shelters in South Andaman Sub- Division (shelters of South Andaman and Little Andaman). The petitioner- company participated in the above tender process. The petitioner-company was selected by the respondent authority and an agreement dated May 22, 2008 was executed by and between the petitioner-company and the Administration of UT of A and N Islands (hereinafter referred to as the said agreement). Clauses 4,5 and 6 of the said agreement prescribed consequences of delay in delivery of ration articles. After completion of supply of ration articles, the petitioner-company raised bills for supply of those articles. A show cause notice dated January 29, 2010 was issued against the petitioner company for violation of Clause 5 of the said agreement. The petitioner company submitted a reply to the respondent No.4 on February 01, 2010, Thereafter, a fine of Rs. 36,73,906/- was imposed upon the petitioner company by virtue of order No. 151 dated February 03, 2010 passed by the respondent No.3. At the very outset, a preliminary objection with regard to maintainability of this writ application is raised on behalf of the respondents. According to the respondents imposition of fine arising out of a non statutory contract having no public law element in it is under challenge in this writ application. 3. THE learned counsel appearing on behalf of the respondents relies upon the definition of public law as contained in Wharton's Concise Law Dictionary, fifteenth edition (Concise) 2009 (at page 843) to submit that public law means those branches of law which deal with the rights/duties and privileges of the public authorities and their relationship with the individual citizens of the State pertain to 'public law'. According to the learned counsel appearing on behalf of the respondents, no public law element is involved in this writ application. According to the learned counsel appearing on behalf of the respondents, no public law element is involved in this writ application. Therefore, it is not maintainable, and the dispute under reference must be relegated to a suit for proper adjudication upon consideration of the documents and evidences to be adduced in course of hearing of that suit. 4. THE learned counsel appearing on behalf of the respondents relied upon the decisions of Kerala State Electricity Board v. Kurian E. Kalathil reported in (2006) 6 SC 293, ABL International Limited v. Export Credit Guarantee Corporation of lndia Ltd., reported in (2004) 3 SCC 553 and Food Corporation of India v. Sell Ltd. reported in (2008) 3 SCC 440 in support of his above submission. On the other hand, the learned counsel appearing on behalf of the petitioner submits that interference of a Court sitting in writ jurisdiction in a contractual matter depends upon the facts and circumstances of the case. No straight jacket formula can be followed to relegated a matter to a suit ignoring the facts and circumstances of a case. However, in case of resolving a disputed question of fact or for computation of damages, writ application is not maintainable. He further submits that in case of examining the action of the authority in the light of the terms and conditions of a contract cart be entertained in a writ application. According to him, in this case, the action of the respondent authority is to be examined in the light of the condition prescribed in Clauses 4, 5 and 6 of the agreement. Therefore, the writ application is maintainable. 5. HE relies upon the decisions of State of U.P. v. Mohammad Nooh reported in AIR 1958 SC 86 and Vencil Pushpraj v. State of Rajasthan reported in AIR 1991 SC 536 6. I have heard the learned counsels appearing for the respective parties with regard to the preliminary objection raised in the matter and have, also considered the facts and circumstances of this case. It is true that ordinarily a Court sitting in writ jurisdiction must be slow to interfere with the dispute between the parties arising out of a non-statutory contract having no public law element involved in it. It is true that ordinarily a Court sitting in writ jurisdiction must be slow to interfere with the dispute between the parties arising out of a non-statutory contract having no public law element involved in it. But in a case where the action of the State in the contractual field is the subject matter of judicial review on the basis of the interpretation of terms and conditions of that contract, the writ Court can interfere with that matter instead of relegating the parties to resolve the dispute in a suit. Reference may be made to the decision of ABL International Ltd. (supra) and the relevant portion of the above decisions (at pages 578 and 679) are set out below: "We find no force in this agreement, 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 it 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 facts, 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. We have already noted the decisions of this Court which is clear terms have laid down that mere existence of disputed questions of fact ipso facto does not prevent a writ Court from determining the disputed questions of fact." Considering the dispute involved in this writ application, I find that same may be resolved without interfering with, any disputed question of fact. The dispute can be resolved on the basis of the interpretation of Clauses 4, 5 and 6 of the said agreement. Therefore, preliminary objection raised by the respondents is rejected. 7. The dispute can be resolved on the basis of the interpretation of Clauses 4, 5 and 6 of the said agreement. Therefore, preliminary objection raised by the respondents is rejected. 7. IT is further submitted by the learned counsel appearing an behalf of the petitioners that in view of the provisions of Clauses 4 and 5 delay in supply of ration articles to the Temporary Tsunami Shelters in South Andaman Division was permissible for a period of 10 days with penalty prescribed therein. IT is further submitted by him that in view of the provisions of Clause 5 of the said agreement, the respondents could realize a fine at the rate of Rs. 10,000/- per day for 10 days only subject to a maximum of 10% of the tendered cost. IT was open to the respondent authority to purchase those ration articles from open market in case of delay after expiry of 10 days beyond the prescribed tenure. Since the authority had accepted the delivery of ration articles from the petitioner-company after expiry of 10 days beyond the prescribed time limit, it was not open to them to realize fine for a period more than 10 days subject to a maximum of 10% of the tender cost in terms of Clauses 5 and 6 of the said agreement. 8. IT is submitted by the learned counsel that the above issue has already been settled by this High Court in a writ petition in an identical matter by a judgment dated February 10, 2009 delivered in the matter of M/s Durga Trading Company v. The Lieutenant Governor (In Re: W.P. No. 269 of 2009). IT is further submitted that the above decision was upheld by a Division Bench of this Court by a judgment dated August 02, 2010 delivered in the matter of the Lieutenant Governor v. M/s Durga Trading Company (In Re.: MAT No. 034 of 2010). On the other hand, it is submitted by the learned counsel appearing on behalf of the respondents that there was no bar or impediment for imposing penalty at the rate of 10,000/- per day for delay in supplying the ration articles to the Temporary Tsunami Shelters in South Andaman sub-division (shelters of South Andaman and Little Andaman) after expiry of 10 days beyond the prescribed time limit. It is also submitted by him that there was difference with regard to the facts of the cases relied upon by the learned counsel appearing on behalf of the petitioners. According to him, there was an office note of the Finance Department with regard to realization of penalty unlike this case. 9. HAVING heard the learned counsel appearing on behalf of the respective parties and also considering the facts and circumstances of this case, I find that the provisions of Clauses 4, 5 and 6 are required to be taken into consideration for interpretation of those clauses and the above provisions are set out below: "4. In case of delay in delivery of the ration articles, a maximum delay of ten days beyond the prescribed time limit will be allowed with penalty @ Rs. 10,000/- per day subject to a maximum of 10% of the tendered cost. Delivery beyond prescribed time limit means any delay even at one single village/shelter of any one item in any one of the location as specified in the Tender/supply order. The supplier can not claim any excuse on any ground stating the reason that he/she has done the delivery of most of the items at most of the locations except one or two locations. 5. That the delay in submission of intimation regarding delivery of ration to the Shelter in charge (as stated at para No.3 above) beyond a period of 10 days will attract a fine of Rs. 10,000/- per day subject to a maximum of " 10% of the tendered cost. The supplier shall not wait for the verification of bills by the Shelter in charge/Special Relief Officer/Assistant Commissioner and shall give details as required above to the Directorate without fail. 6. That if the supplier fails at any time to render all or any service under the Tender Terms and Condition beyond the permissible delay period of ten days (with penalty @ Rs.10,000/- per day), the Director of his authorized official(s) may at his discretion get the supply done through purchases from open market at the risk and cost of the supplier. Extra expenditure if any caused to the Directorate on this account will be recovered from the dues of the supplier or adjusted from the Security Deposit of the supplier or from the bills of the supplier and the tender will also be liable for cancellation and the performance security shall be forfeited." 10. AFTER considering the provisions of the aforesaid clauses of the said agreement, I find that under clauses 4 and 5 of the said agreement, delayed supply of ration articles or delayed submission of intimation regarding delivery of such articles were permissible upto a period of 10 days beyond the prescribed time limit with penalty. I further find from the provisions of Clause 6 of the said agreement that in the event of delay in supplying the ration articles after expiry of 10 days beyond the prescribed time limit, it was open for the respondent authority to purchase those ration articles from open market and to realize the extra expenditure from the petitioner-company. AFTER a harmonious reading of the provisions of Clauses 5 and 6, leads to a conclusion that it was beyond the terms of said agreement to levy penalty for any period after expiry of 10 days beyond the prescribed time limit. In this case penalty was imposed upon the petitioner-company by virtue of Order No. 151 dated February 03, 2010 for the period even after expiry of 10 days beyond the prescribed time limit in respect of delivery of ration articles for the months of August, September, October, November and December of 2008. On the basis of the interpretation of Clause 5 of the said agreement it was not permissible for the respondent authority. The above issue has already been settled by a Division Bench of this Court in the matter of the Lieutenant Governor v. M/s Durga Trading Company (In Re: MAT No.034 of 2010) by a judgment dated August 02, 2010 in an identical matter. The relevant portions of the above judgment are set out below: "We have considered the rival submissions advanced by the learned advocates and are of the view that the plea of the seller is a justified one and the claim made by the orders dated 13th August, 2009 was bad and illegal. The buyer at the highest could have claimed damages contemplated by the parties at the time of making the contract for a period of ten days. The buyer at the highest could have claimed damages contemplated by the parties at the time of making the contract for a period of ten days. Subsequent thereto the buyer had a right either to accept the delayed delivery or to go to the market and buy the goods at the risk and cost of the seller. The buyer did not choose to follow the second option rather contended itself by accepting delivery at a subsequent point of time without any reservation as regards its right to claim any damages. This act of the buyer has disentitled him to make any claim on account of supply of damages for any delay subsequent to ten days of the scheduled period of supply. Accordingly, the amount of Rs. 11,00,000/- offered by the seller was in consonance with the contract and the claim for an aggregate sum of Rs. 14,94,500.00 made by the orders No. 1271 and 1272 dated 13.08.2008 was clearly illegal." 11. I do not find any substance in the submission made on behalf of the respondent that there was difference of facts so far as the above matter is concerned. Because the issue involved in both the matters relates to the interpretation of Clauses of contract. The office note of Finance Department of the respondent authority cannot make any difference with regard to such an interpretation. 12. IN view of the distinguishable facts and circumstances involved in the matter of Food Corporation of India (supra) and Kerala State Electricity Board (supra), those decisions are not applicable in this case. In view of the discussions and observations made hereinabove, the impugned order No. 151 dated February 03, 2010 passed by the respondent No.3 is quashed and set aside so far as the imposition of final amount of penalty in respect of August, September, October, November and December of 2008 is concerned. It is, however; made clear that the respondent No.3 will be at liberty to impose penalty upon the petitioner-company for delayed supply of ration articles to the Temporary Tsunami Shelter of South Andaman Sub-Division (shelters of South Andaman and Little Andaman) for the aforesaid periods in the light of this judgment. 13. THIS writ application is, thus, disposed of. There will be however no order as to costs. Writ petition allowed.