TMI Blog2010 (7) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... ME COURT] It is clear that, (a) in the contract if there is a clause for arbitration, normally, writ court should not invoke its jurisdiction; (b) the existence of effective alternative remedy provided in the contract itself is a good ground to decline to exercise its extraordinary jurisdiction under Article 226; and (c) if the instrumentality of the State acts contrary to the public good, public interest, unfairly, unjustly, unreasonably discriminatory and violative of Article 14 of the Constitution of India in its contractual or statutory obligation, writ petition would be maintainable. Hence, Writ petition is maintainable even in contractual matters. In the case on hand, it is not in dispute that the appellant- Bank, being a public sector Bank, discharging public functions is State under Article 12. In view of the settlement of the dues on the date of filing of the writ petition by arrangement made through another Nationalized Bank, namely, State Bank of India and the statement of accounts furnished by the appellant-Bank subsequent to the same i.e. on 14.05.2009 is 0.00 (nil) outstanding, we hold that the High Court was fully justified in issuing a writ of mandamus for ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the respondent-Company, the appellant-Bank by various letters between 15.09.2008 to 24.04.2009, advised the respondent-Company to shift its loan account to some other Bank. On 12.01.2009, the appellant-Bank sent the Credit Information Report of the respondent-Company to its new Banker, namely, the State Bank of India. On 25.02.2009, the appellant-Bank received an Internal Audit Report in respect of the fraud perpetrated in the accounts of M/s Rajco Steel Enterprises and M/s Kali International Pvt. Ltd., whereby crores of rupees were siphoned away to the account of the respondent-Company. Therefore, on 14.03.2009, the appellant-Bank filed two complaints with the Superintendent of Police, Central Bureau of Investigation, Kolkata complaining of the fraud and requesting the CBI, Kolkata to investigate into the matter. c) On 02.04.2009, Special Audit Team of the appellant- Bank submitted its report on the fraud committed by the respondent-Company which revealed the transfer of a huge amount of funds from the account of M/s Rajco Steel Enterprises and M/s Kali International Pvt. Ltd. to the account of the respondent-Company. On 06.05.2009, the respondent-Company requested the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the relevant terms of the contract settlement of entire money due to the appellant-Bank by an arrangement made through another nationalized Bank, submitted that the writ petition before the High Court under Article 226 is maintainable and the High Court is fully justified in issuing direction for return of the title deeds of the Company. 6. We have carefully considered the rival contentions of both the parties and perused the relevant materials. 7. In order to answer the above contentions, there is no need to narrate all the factual details except which are required for the disposal of the above appeal. It is true that the respondent-Company filed a writ petition before the learned single Judge of the Calcutta High Court praying for issuance of a writ of mandamus directing the Bank to forthwith take steps to release the security documents and issue 'NOC' and 'NDC' pertaining to their company's accounts without any further delay. It is also not in dispute that the respondent-Company carries on the business of manufacturing and trading in ingots and various other types of steel and for the said purpose, it requires financial support from the institution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arabazar Branch, Kolkata. Please refer to our above account which has been taken over by State Bank of India, Chowringhee Branch, Kolkata. The Chowringhee Branch of State Bank of India had given a Banker's Cheque of ₹ 15.00 crores which have been encashed and appropriated to our outstanding balances. We regret to inform that inspite of such adjustments on 9th of May, 2009, we are yet to get our Security documents, NOC, NDC etc. We hope that you will appreciate that above documents are utmost important and shall be handed over urgently. We request you to immediately arrange to deliver the documents. Thanking you, Yours faithfully, For DEVI ISPAT LTD. SD/- Director Cc to: The Branch Manager Central Bank of India Barabazar Branch Kolkata. The contents of this letter reiterates the stand of the respondent-Company. 8. In view of the fact that the respondent-Company had cleared the dues which were pending at the relevant point of time through the State Bank of India, they are entitled to get their title deeds to enable them to deposit the same with the State Bank of India as their security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent is payable to it under the contract, was wholly misconceived and was not maintainable in law. 10. The next decision relied on by learned senior counsel for the appellant in Kerala State Electricity Board and Anr. v. Kurien E. Kalathil and Ors. (2000) 6 SCC 293. He heavily placed reliance on paras 10 and 11 of this judgment which read thus: 10. We find that there is a merit in the first contention of Mr. Raval. Learned Counsel has rightly questioned the maintainability of the writ petition. The interpretation and implementation of a clause in a contract cannot be the subject-matter of a writ petition. Whether the contract envisages actual payment or not is a question of construction of contract. 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 observation of the High Court that since the obligations imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt- Company has demonstrated that based on the advise of the appellant-Bank, they shifted their accounts to another Nationalized Bank and through an arrangement with the State Bank of India, a cheque of ₹ 15 crores was deposited by their Bank and in token of the same, by statement of accounts dated 14.05.2009 the appellant- Bank clearly mentioned that there is no due or nil balance from the respondent-Company (Emphasis supplied). In such circumstances, when the relief sought for does not relate to interpretation of any terms of contract, the Bank being a Nationalized Bank, a Writ Court can issue appropriate direction in certain circumstances as mentioned above. In such a factual matrix, the reliance placed on these two decisions is not helpful to the appellant-Bank. 12. Though Mr. Rohtagi has pointed out that after filing of the writ petition, the respondent-Company owes money through their relationship with other concerns, as rightly pointed out by Mr. Sundaram, the position on the date of the filing of the writ petition is the relevant date to test the direction of the High Court. It is not in dispute that the writ petition has been filed by the respondent-Company before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not committed any violation of the clauses or the terms of the insurance contract. On the contrary, it observed that as per proviso (d) to Clause (xi) of the said insurance contract, by refusing to accept the barter of goods, the first appellant had violated the terms of the contract disentitling it to raise any claim on the first respondent. It is against this order of the Appellate Bench of the Calcutta High Court, the appellants therein filed an appeal before this Court by way of special leave. After adverting to certain factual details, the Court framed following question: As could be seen from the arguments addressed in this appeal and as also from the divergent views of the two courts below, one of the questions that falls for our consideration is whether a writ petition under Article 226 of the Constitution of India is maintainable to enforce a contractual obligation of the State or its instrumentality, by an aggrieved party. The following discussion and conclusion are apt and relevant for our purpose. They are: 9. In our opinion this question is no more res integra and is settled by a large number of judicial pronouncements of this Court. In K.N. Guruswamy v. Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntality of the State which would be 'other authority' under Article 12 cannot commit breach of a solemn undertaking to the prejudice of the other party which acted on that undertaking or promise and put itself in a disadvantageous position. The appellant Corporation, created under the State Financial Corporations Act, falls within the expression of 'other authority' in Article 12 and if it backs out from such a promise, it cannot be said that the only remedy for the aggrieved party would be suing for damages for breach and that it could not compel the Corporation for specific performance of the contract under Article 226. 12. The learned Counsel appearing for the first respondent, however, submitted that this Court has taken a different view in the case of LIC of India v. Escorts Ltd. wherein this Court held: (SCC p. 344, para 102) If the action of the State is related to contractual obligations or obligations arising out of the tort, the court may not ordinarily examine it unless the action has some public law character attached to it. Broadly speaking, the court will examine actions of State if they pertain to the public law domain and refrain from examining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Article 226. The existence of an effective alternative remedy -- in this case, provided in the contract itself -- is a good ground for the court to decline to exercise its extraordinary jurisdiction under Article 226. 14. This judgment again, in our opinion, does not help the first respondent in the argument advanced on its behalf that in contractual matters remedy under Article 226 of the Constitution does not lie. It is seen from the above extract that in that case because of an arbitration clause in the contract, the Court refused to invoke the remedy under Article 226 of the Constitution. We have specifically inquired from the parties to the present appeal before us and we have been told that there is no such arbitration clause in the contract in question. It is well known that if the parties to a dispute had agreed to settle their dispute by arbitration and if there is an agreement in that regard, the courts will not permit recourse to any other remedy without invoking the remedy by way of arbitration, unless of course both the parties to the dispute agree on another mode of dispute resolution. Since that is not the case in the instant appeal, the observations of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. After holding so, this Court has concluded as under: 53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution. Thus if we apply the above principle of applicability of Article 14 to the facts of this case, then we notice that the first respondent being an instrumentality of the State and a monopoly body had to be approached by the appellants by compulsion to cover its export risk. The policy of insurance covering the risk of the appellants was issued by the first respondent after seeking all required information and after receiving huge sums of money as premium exceeding ₹ 16 lakhs. On facts we have found that the terms of the policy do not give room to any ambigui ..... X X X X Extracts X X X X X X X X Extracts X X X X
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