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2014 DIGILAW 372 (CHH)

V. Srihari Raju v. Municipal Corporation

2014-10-28

NAVIN SINHA, PRITINKER DIWAKER

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JUDGMENT NAVIN SINHA, J. We have heard learned counsel for the petitioner and Respondent Corporation. 2. A Contract Agreement was signed between the parties on 17-10-2005 awarding contract works to the Petitioner for installation of Automatic Traffic Signals at Twelve intersections in the city of Raipur. The duration of the contract was for 20 years. The petitioner was permitted to display commercial advertisements on the body of the illuminated traffic signals including Cabin and advertising banners of specified dimensions only as mentioned in the Contract. Clause 6.1 of the Contract permitted either party to terminate the Agreement in the manner provided. The Agreement was terminated by the respondents on 6-7-2012. The petitioner assailed the termination in W. P. (C) 1323 of 2012. The writ application was diposed on 9-10-2013 with directions to the Petitioner to remove defects pointed out by the respondent Corporation failing which it was open for the respondents to proceed in accordance with law. 3. The respondents have issue fresh orders for termination of the contract on 14-7-2014 which is challenged in the present writ application. Learned counsel for the petitioner submitted that notwithstanding the contractual dispute, the writ petition was maintainable as the respondents were acting arbitrarily, mala fide and on basis of non-existent facts invoking Article 14 of the Constitution. It was next submitted that since there was no arbitration clause in the contract, the writ petition was maintainable. The remedy of a civil suit was neither expeditious nor efficacious. Reliance was placed on (2004) 3 SCC 553 (ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd.), (2009) 8 SCC 339 : (2009 AIR SCW 5277) (National Thermal Power Corporation Limited v. Mahesh Dutta), 2007 AIR SCW 2010 : (AIR 2007 SC (Supp) 152) (M/s. Popcorn Entertainment v. City Industrial Development Corporation) and (2010) 6 SCC 373 : ( AIR 2010 SC 1955 ) (Secretary, Cannanore District Muslim Educational Association, Karimbam v. State of Kerala). 4. It was next contended that the termination was also bad non-compliance with Clause 6.1 of the contract as notice of 30 days with opportunity to remedy the breach was not provided before termination. 5. Cantilever advertisement for installation on traffic signals did not exist in 2005 when the contract was signed. The respondents had themselves later permitted cantilever advertisements. There was no prohibition in the contract regarding installation of cantilever advertisement. 5. Cantilever advertisement for installation on traffic signals did not exist in 2005 when the contract was signed. The respondents had themselves later permitted cantilever advertisements. There was no prohibition in the contract regarding installation of cantilever advertisement. The installation of such advertisement by the petitioner therefore cannot be considered a breach of the contract. After notice by the respondents objecting to the same, it has been removed. Termination on that ground is therefore unjustified. Likewise installation of revolving advertisement was also not prohibited under the contract. They have also been removed after objection by the respondents. If the contract provided for an opportunity to remedy the breach and it having been done, termination on that ground was arbitrary as procedure prescribed for termination had not been followed. Reliance was placed on 2014 (3) SCC 502 : (AIR 2014 SC 1792) (Dipak Babaria v. State of Gujarat) and 2014 AIR SCW 4586 : ( AIR 2014 SC 3371 ) (Gorkha Security Services v. Govt. of NCT of Delhi and Ors.) 6. The termination of the contract had been done mala fide in order to favour blue eyed persons. The respondents by change of guard suddenly find the duration of the contract uncomfortable and are therefore fishing for grounds to terminate. The petitioner is willing to make all traffic signals under the contract operational within 48 hours. 7. Learned counsel for the Corporation raised a preliminary objection to the maintainability of the writ petition in a contractual matter. It was submitted that similar objection had been raised in W.P. (C) No. 1323 of 2012 but remained undecided. Article 226 cannot be invoked where disputed questions of facts in a contractual dispute are involved. The writ petition withholds details of several notices given to the petitioner to remedy breaches despite which the petitioner failed to do so. One of such notices dated 25-3-2014 stated that in the event of failure to remedy breaches, action would be taken to terminate the contract. The subsequent communication dated 24-6-2013 reiterated that action would be taken under Clause 6.1 of the contract. The contract was terminated thereafter. The writ petition was also liable to be dismissed on grounds of suppression of facts by not placing the aforesaid letters and other similar communications made before termination on record. The subsequent communication dated 24-6-2013 reiterated that action would be taken under Clause 6.1 of the contract. The contract was terminated thereafter. The writ petition was also liable to be dismissed on grounds of suppression of facts by not placing the aforesaid letters and other similar communications made before termination on record. Reliance was placed on (1977) 3 SCC 457 : ( AIR 1977 SC 1496 ) (M/s. Radhakrishna Agarwal and others v. State of Bihar and others), (2008) 12 SCC 481 : (AIR 2009 SC (supp) 1309) (K. D. Sharma v. Steel Authority of India Limited and others) and (2013) 14 SCC 304 (Mutha Associates and others v. State of Maharashtra and others). 8. We have considered the submission on behalf of the parties. The contract agreement dated 17-10-2005 undoubtedly falls in the realm of private law. But because one of the contracting parties is the Corporation, a State under Article 12 of the Constitution, it cannot be said that under all circumstances the writ petition is not maintainable under Article 226. If there has been a violation of Article 14 of the Constitution, a writ petition would undoubtedly be maintainable. If the grounds for termination are non est, outright arbitrary, dehors the contract and reflect apparent mala fide, the writ petition still would be maintainable. Conversely if there has been a breach of the terms and conditions by one of the parties and disputed questions of facts arise for determination with regard to the breach requiring the taking of evidence to determine liabilities, making it difficult to hold outright arbitrariness or mala fide, the writ Court shall not interfere and the appropriate remedy for the aggrieved would lie before the competent Civil Court. 9. The submission that what was not specifically prohibited under the contract was deemed permissible at the desire of the petitioner does not appeal to us. To uphold the argument can lead to serious consequences with regard to the contract amounting to novation of the contract by the Court which can be done with the consent of the parties only. The Court in exercise of judicial review cannot rewrite the terms of the contract. The aforesaid submission is but prima facie admission of breach by the petitioner. The Court in exercise of judicial review cannot rewrite the terms of the contract. The aforesaid submission is but prima facie admission of breach by the petitioner. This coupled with the conduct of removing the cantilever advertisement and the revolving advertisement after objection by the respondent is but a categorical admission of breach of the contract by the petitioner. The cantilever advertisement, if at all was permitted, was only for the Sharda Chowk and not generally as contended by the petitioner with any generalized approval of dimensions. The various correspondence of the corporation revealed that it had specifically objected to it on more than one occasion. The reply of the petitioner on 4-7-2014 that it was not able to understand the rationale for not permitting them is but an act in persistence of the breach. 10. Natural justice cannot have a rigid definition on prefixed yardsticks or guidelines. Its meaning, intent, purport and scope will vary according to the facts of each case. What may suffice in one set of facts may be insufficient in another. In (1977) 2 SCC 256 : ( AIR 1977 SC 965 ) (Board of Mining Examination and Chief Inspector of Mines v. Ramjee), it was observed as follows : '13.......... Natural justice is no unruly horse, no lurking landmine, nor a judicial cure-all. If fairness is shown by the decision-maker to the man proceeded against, the form, features and the fundamentals of such essential processual propriety being conditioned by the facts and circumstances of each situation, no breach of natural justice can be complained of.......' 11. The Corporation has sent various letters to the petitioner after the order in W.P. (C) No. 1323 of 2012 as mentioned in the impugned order 14-7-2014 and copies of which have also been brought on record in reply by the Corporation. It cannot be said in the facts of the case that there has been breach of the principles of natural justice. 12. Clause 6.1 of the contract provides the right to terminate in each of the parties. The Corporation has authority to terminate on breach of any condition of the contract but after giving reasonable opportunity. The 30 days notice period and opportunity to remedy the breach within same is applicable in favour of the petitioner and against the respondents when the petitioner terminates the contract for breaches on part of the Corporation. The Corporation has authority to terminate on breach of any condition of the contract but after giving reasonable opportunity. The 30 days notice period and opportunity to remedy the breach within same is applicable in favour of the petitioner and against the respondents when the petitioner terminates the contract for breaches on part of the Corporation. The clause does not provide for 30 days notice period before termination by the Corporation as was contended on behalf of the petitioner. 13. The facts of the case evidently reveal complicated questions of disputed facts for adjudication with regard to breaches, denial of the same, rectification of breach etc. The writ petition itself pleads that ' allegations and counter allegations have been made regarding compliance of the reciprocal obligation by the parties as at one hand, the petitioner has filed various documents to show compliance ...... The respondent authorities have made allegations of non-compliance.........' No further evidence is required that there are disputed facts for adjudication impermissible in jurisdiction under Article 226. 14. The law with regard to non-maintainability of a writ petition in a contractual dispute involving disputed questions of facts stands well settled and hardly needs further exposition. In 1993 Supp (3) SCC 635 : ( AIR 1993 SC 1494 ) (Food Corporation of India v. Jagannath Dutta), it was observed as follows : '5. We are of the view that the High Court was not justified in quashing the impugned notice especially when the terms and conditions of the contract permitted the termination of the agreement by either of the parties. The High Court should not have gone into the question of contractual-obligation in its writ jurisdiction under Article 226 of the Constitution........' 15. In (2000) 6 SCC 293 : ( AIR 2000 SC 2573 ) (Kerala SEB v. Kurien E. Kalathil) holding that jurisdiction under Article 226 could not be invoked for contractual disputes, it was observed as follows : '10............ If a term of a contract is violated, ordinarily the remedy is not the writ petition under Article 226. We are also unable to agree with the observations of the High Court that the contractor was seeking enforcement of a statutory contract. A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. We are also unable to agree with the observations of the High Court that the contractor was seeking enforcement of a statutory contract. A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. We are also unable to agree with the observation of the High Court that since the obligations imposed by the contract on the contracting parties come within the purview of the Contract Act, that would not make the contract statutory............' 16. Contractual disputes based on disputed facts could not be adjudicated in the writ jurisdiction was considered in (2001) 2 SCC 160 : ( AIR 2001 SC 549 ) (Life Insurance Corporation of India v. Asha Goel (Smt.) observing: '10....... The determination of the question depends on consideration of several factors like, whether a writ petitioner is merely attempting to enforce his/her contractual rights or the case raises important questions of law and constitutional issues, the nature of the dispute raised, the nature of inquiry necessary for determination of the dispute etc. The matter is to be considered in the facts and circumstances of each case. While the jurisdiction of the High Court to entrtain a writ petition under Article 226 of the Constitution cannot be denied altogether, courts must bear in mind the self-imposed restriction consistently followed by High Courts all these years after the constitutional power came into existence in not entertaining writ petitions filed for enforcement of purely contractual rights and obligations which involve disputed questions of facts. The courts have consistently taken the view that in a case where, for determination of the dispute raised, it is necessary to inquire into facts for determination of which it may become necessary to record oral evidence a proceeding under Article 226 of the Constitution, is not the appropriate forum......... This Court from time to time disapproved of a High Court entertaining a petition under Article 226 of the Constitution in matters of enforcement of contractual rights and obligation particularly where the claim by one party is contested by the other and adjudication of the dispute requires inquiry into facts. We may notice a few such cases; Mohd. Hanif v. State of Assam; Banchhanidhi Rath v. State of Orissa ( AIR 1972 SC 843 ); Rukmanibai Gupta v. Collector, Jabalpur ( AIR 1981 SC 479 ); Food Corpn. We may notice a few such cases; Mohd. Hanif v. State of Assam; Banchhanidhi Rath v. State of Orissa ( AIR 1972 SC 843 ); Rukmanibai Gupta v. Collector, Jabalpur ( AIR 1981 SC 479 ); Food Corpn. of India v. Jagannath Dutta ( AIR 1993 SC 1494 ) and State of H. P. v. Raja Mahendra Pal ( AIR 1999 SC 1786 ).' 17. In (2002) 1 SCC 216 : ( AIR 2002 SC 206 ) (State of Bihar v. Jain Plastics and Chemicals Ltd.), it was observed as follows: '7. In our view, it is apparent that the order passed by the High Court is, on the face of it, illegal and erroneous. 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.' 18. Relying on Radhakrishna Agarwal ( AIR 1977 SC 1496 ) (supra), it was observed in (2005) 12 SCC 725 : ( AIR 2006 SC 198 , para 13) (Orissa Agro Industries Corporation Ltd. v. Bharati Industries) as follows : '11. In Radhakrishna Agarwal v. State of Bihar, the types of cases in which breaches of alleged obligation by the State or its agents can be set up were enumerated. The third category indicated is where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract and in exercise of executive power of the State. The present case is covered by the said category. No writ order can be issued under Article 226 to compel the authorities to remedy a breach of contract; pure and simple. The present case is covered by the said category. No writ order can be issued under Article 226 to compel the authorities to remedy a breach of contract; pure and simple. It is more so when factual disputes are involved.' 19. Mala fide is easier said than proved. The leadings have to be specific. The mere generalized assertion that the respondents wanted to favour blue eyed persons without any details of the same or names is too vague to be considered. 20. ABL International (supra) relied upon by the petitioner does not lay down any universal principle that a writ petition would lie under all circumstances in a contractual dispute. The conclusion for the limited maintainability under certain circumstances only subject to the discretionary jurisdiction of the Court under Article 226 finds discussion in paragraphs 27 and 28 of the judgment. 21. National Thermal Power Corporation (2009 AIR SCW 5277) (supra) related to Land Acquisition proceedings and has no application to the facts of the case. 22. M/s. Popcorn Entertainment (AIR 2007 SC (supp) 152) (supra) likewise does not lay down any universal proposition that a writ petition was the appropriate remedy in a contractual dispute. The conclusion at paragraph 41 of the judgment leaves it in the discretion of the Court in the facts and circumstances of a case. 23. Dipak Babaria (AIR 2014 SC 1792) (supra) on the dictum that procedure prescribed must be followed relates to procedure prescribed by legislative mandate. The principle has no application whilst interpreting the terms of a contract between the parties. 24. Gorkha Security Services ( AIR 2014 SC 3371 ) (supra) related to blacklisting ordered without a proper show-cause notice in accordance with law. It has no application in the facts of the present case relating to the termination of a contract on account of breach alleged. 25. In view of the aforesaid discussion we do not consider it necessary to decide the question with regard to suppression of facts to dismiss the writ petition as urged on behalf of the respondents. As we have declined to uphold mala fide contended on behalf of the petitioner it is not considered necessary to deal with Mutha Associates (supra). 26. In view of the aforesaid discussion we do not consider it necessary to decide the question with regard to suppression of facts to dismiss the writ petition as urged on behalf of the respondents. As we have declined to uphold mala fide contended on behalf of the petitioner it is not considered necessary to deal with Mutha Associates (supra). 26. In W. P. (C) No. 1323 of 2012 preferred by the petitioner earlier specific objection with regard to non-maintainability of the petition under 226 in contract matter was specifically raised on behalf of the respondents. It remained undecided. The conclusion at paragraph 13 of the order in our considered opinion is more than sufficient evidence of breach committed by the petitioner when it gives directions to the petitioner for removal of defects mentioned in the notice of the Corporation dated 23-9-2013. Liberty was reserved to the Corporation by the Court to proceed in accordance with law if breach persisted. 27. The petitioner, if so advised, can avail the remedies under the civil laws of the land. If such suit is filed it shall be decided on its own merits without being influenced by any discussion in the present order. 28. The writ petition is held to be not maintainable and is dismissed. Petition dismissed.