1. This is an assigned matter by virtue of order dated 31st October 2020 passed on the administrative side by Hon'ble the Chief Justice.
2. M/s Vishwesaraiya Construction, the appellant (hereinafter referred to as “the writ petitioner”) has filed this Letters Patent Appeal under clause 10 of Letters Patent of 1916 constituting High Court of Judicature at Patna (as adopted by High Court of Jharkhand) against the order dated 17th June 2019 by which the learned writ Court has dismissed the writ petition.
3. In WP(C) No. 1280 of 2016, the writ petitioner has claimed difference of rate and interest @ 18% per annum.
4. Mr. Mahesh Tewari, the learned counsel for the appellants has raised three-fold submissions:(i) prayer in the writ petition was not adjudicated and the learned writ Court dismissed the writ petition on the ground that claim of the writ petitioner for payment of 10th bill was not admitted by the employer (ii) the writ Court's order is cryptic without any discussion whether claim made by the appellant was admissible or barred under the agreement and (iii) whether extension of time granted by the employer in the circumstances of the case would debar the writ petitioner from claiming difference in the schedule of rate of 2007 and the schedule of rate made applicable in 2011.
5. Mrs. Darshana Poddar Mishra, the learned Additional Advocate General-I, submits that under clause 5 read with clause 12(a) of the Conditions of Contract the decision of the Executive Engineer shall be final and in any event once extension of time is granted to the contractor he would be precluded from claiming escalation in price.
6. Clause 5 and clause 12(a) of the Conditions of Contract read as under:
If the contractor shall desire any extension of the time for completion of the work, on the ground of his having been unavoidably hindered in its execution or on any other ground other than those mentioned in clause 12(a) he shall apply in writing to the Executive Engineer within 40 days from the date of starting of the hindrance on account of which be desires such extension as aforesaid and the Executive Engineer shall, if in his opinion (which shall be final) reasonable grounds be shown there of authorized such extension of time, if any as may in his opinion be necessary or proper. The Executive Engineer shall at the same time inform the contractor whether he claims compensation for the delay.
The contractor shall not be entitled to claim any compensation for loss suffered by him on account of delay by or on behalf of Government in the supply of materials as stores which the Government may have undertaken to supply where such failure is due to:-
(i) Natural Calamities, (ii) act of enemies, (iii) transport and procurement difficulties or (iv) circumstances beyond the control of the State Government.
In case of such failure in delay in the supply of materials or stores on an application by the contractor within 30 days from the date of such failure of delay, such extension of time shall be granted to the contractor for completion of the work as shall appears to the Engineer to be reasonable in accordance with the circumstances of the case. The decision of the Executive Engineer as to the extension of time shall be accepted as finally by the contractor.”
7. A reading of clause 5 of the Conditions of Contract would indicate that while granting extension of time the Executive Engineer shall at the same time inform the contractor “whether he claims compensation for delay”. The last portion of clause 5 – “whether he claims compensation for delay” – appears to a drafting error. In our opinion, the expression could have been (a) “whether the contractor claims compensation” or (b) “the contractor shall not claim compensation for delay”. We may indicate here that we are not called upon to interpret clause 5 and we have made the aforesaid observations in passing only, for the last portion of clause 5 does not make any sense. The fact, however, remains that there are references about claim of compensation on account of delay under clause 5, and under clause 12(a) which debars the contractor to claim compensation under certain circumstances.
8. The learned Additional Advocate General has referred to the judgments in “Joshi Technologies International Inc. v. Union of India and others” (2015) 7 SCC 728 and “Punjab National Bank v. Atmanand Singh” 2020 SCC OnLine SC 433 to support the writ Court's order on the ground that disputed questions of fact could not have been adjudicated by the learned writ Court and, therefore, WP(C) No. 1280 of 2016 was rightly dismissed.
9. On the question of powers of the writ Court, we are not required to look beyond the judgments referred to by the learned Additional Advocate General.
10. In “Joshi Technologies International Inc.” the Hon'ble Supreme Court has held as under:
“70. Further, the legal position which emerges from various judgments of this Court dealing with different situations/aspects relating to contracts entered into by the State/public authority with private parties, can be summarised as under:
70.1. At the stage of entering into a contract, the State acts purely in its executive capacity and is bound by the obligations of fairness.
70.2. State in its executive capacity, even in the contractual field, is under obligation to act fairly and cannot practise some discriminations.
70.3. Even in cases where question is of choice or consideration of competing claims before entering into the field of contract, facts have to be investigated and found before the question of a violation of Article 14 of the Constitution could arise. If those facts are disputed and require assessment of evidence the correctness of which can only be tested satisfactorily by taking detailed evidence, involving examination and cross-examination of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article 226 of the Constitution. In such cases the Court can direct the aggrieved party to resort to alternate remedy of civil suit, etc.
70.4. Writ jurisdiction of the High Court under Article 226 of the Constitution was not intended to facilitate avoidance of obligation voluntarily incurred.
70.5. Writ petition was not maintainable to avoid contractual obligation. Occurrence of commercial difficulty, inconvenience or hardship in performance of the conditions agreed to in the contract can provide no justification in not complying with the terms of contract which the parties had accepted with open eyes. It cannot ever be that a licensee can work out the licence if he finds it profitable to do so: and he can challenge the conditions under which he agreed to take the licence, if he finds it commercially inexpedient to conduct his business.
70.6. Ordinarily, where a breach of contract is complained of, the party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specifically performed. Otherwise, the party may sue for damages.
70.7. Writ can be issued where there is executive action unsupported by law or even in respect of a corporation there is denial of equality before law or equal protection of law or if it can be shown that action of the public authorities was without giving any hearing and violation of principles of natural justice after holding that action could not have been taken without observing principles of natural justice.
70.8. If the contract between private party and the State/instrumentality and/or agency of the State is under the realm of a private law and there is no element of public law, the normal course for the aggrieved party, is to invoke the remedies provided under ordinary civil law rather than approaching the High Court under Article 226 of the Constitution of India and invoking its extraordinary jurisdiction.
70.9. The distinction between public law and private law element in the contract with the State is getting blurred. However, it has not been totally obliterated and where the matter falls purely in private field of contract, this Court has maintained the position that writ petition is not maintainable. The dichotomy between public law and private law rights and remedies would depend on the factual matrix of each case and the distinction between the public law remedies and private law field, cannot be demarcated with precision. In fact, each case has to be examined, on its facts whether the contractual relations between the parties bear insignia of public element. Once on the facts of a particular case it is found that nature of the activity or controversy involves public law element, then the matter can be examined by the High Court in writ petitions under Article 226 of the Constitution of India to see whether action of the State and/or instrumentality or agency of the State is fair, just and equitable or that relevant factors are taken into consideration and irrelevant factors have not gone into the decision-making process or that the decision is not arbitrary.
70.10. Mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirements of due consideration of a legitimate expectation forms part of the principle of non-arbitrariness.
70.11. The scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes.”
11. In “Punjab National Bank” the law on the subject has been restated by the Hon'ble Supreme Court thus:
“23. We restate the above position that when the petition raises questions of fact of complex nature, such as in the present case, which may for their determination require oral and documentary evidence to be produced and proved by the concerned party and also because the relief sought is merely for ordering a refund of money, the High Court should be loath in entertaining such writ petition and instead must relegate the parties to remedy of a civil suit. Had it been a case where material facts referred to in the writ petition are admitted facts or indisputable facts, the High Court may be justified in examining the claim of the writ petitioner on its own merits in accordance with law.
24. In the next reported decision relied upon by the respondent No. 1 in Babubhai (supra), no doubt this Court opined that if need be, it would be open to the High Court to cross-examine the affiants. We may usefully refer to paragraph 10 of the said decision, which reads thus:—
“10. It is not necessary for this case to express an opinion on the point as to whether the various provisions of the Code of Civil Procedure apply to petitions under Article 226 of the Constitution. Section 141 of the Code, to which reference has been made, makes it clear that the provisions of the Code in regard to suits shall be followed in all proceedings in any court of civil jurisdiction as far as it can be made applicable. The words “as far as it can be made applicable” make it clear that, in applying the various provisions of the Code to proceedings other than those of a suit, the court must take into account the nature of those proceedings and the relief sought. The object of Article 226 is to provide a quick and inexpensive remedy to aggrieved parties. Power has consequently been vested in the High Courts to issue to any person or authority, including in appropriate cases any government, within the jurisdiction of the High Court, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari. It is plain that if the procedure of a suit had also to be adhered to in the case of writ petitions, the entire purpose of having a quick and inexpensive remedy would be defeated. A writ petition under Article 226, it needs to be emphasised, is essentially different from a suit and it would be incorrect to assimilate and incorporate the procedure of a suit into the proceedings of a petition under Article 226. The High Court is not deprived of its jurisdiction to entertain a petition under Article 226 merely because in considering the petitioner's right of 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 no doubt discretionary, but the discretion must be exercised on sound judicial principles. When the petition raises complex questions of fact, 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 should not appropriately be tried in a writ petition, the High Court may decline to try a petition (see Gunwant Kaur v. Bhatinda Municipality [(1969) 3 SCC 769]. If, however, on consideration of the nature of the controversy, the High Court decides, as in the present case, that it should go into a disputed question of fact and the discretion exercised by the High Court appears to be sound and in conformity with judicial principles, this Court would not interfere in appeal with the order made by the High Court in this respect.”
12. As we read the judgment in “Punjab National Bank”, we gather that the writ Court is not deprived of its jurisdiction to entertain a petition under Article 226 of the Constitution of India merely because in consideration of the petitioner's right of relief questions of fact may fall for determination.
13. The learned Additional Advocate General would refer to the decision in “ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd.” (2004) 3 SCC 553” to submit that the High Court having regard to the facts of the case has discretion to entertain or not to entertain a writ petition and therefore the Letters Patent Court would not interfere with such exercise of discretionary powers vested in the writ Court.
14. In the counter affidavit filed before the writ Court the State of Jharkhand gave details of payment made to the writ petitioner. In paragraph No. 12 of the counter affidavit, details of allotment and expenditure as regards work executed by M/s Vishwesaraiya Construction and M/s Durga Construction have also been given. These details disclose that allotment for the work executed by the writ petitioner was made till the financial year 2014-15. It is pleaded that the writ petitioner in spite of allotment of Rs. 1,29,83,818/- did not execute any work in the financial year 2010-11 and therefore remaining work for Rs. 49,06,199/- was executed by M/s Durga Construction. The whole stress in the counter affidavit filed before the writ Court on behalf of the State of Jharkhand was on delay in execution of work by the writ petitioner.
15. We further observe that in the counter affidavit the respondents have pleaded that Rs. 11,02,971/- was paid to the contractor towards satisfaction of 10th bill raised by it. In fact, no claim for payment of 10th bill was raised by the contractor rather a claim was made for extra payment on account of escalation in the rate of schedule. We may indicate that in the communications dated 15th October 2014, 14th February 2015 etc. there are specific references about escalation claims raised by the contractor.
16. Still, the learned writ Court has held as under:
“9. Coming to the fact of this case since the claim of the petitioner pertaining to 10th and final bill is in dispute as would be evident from respective paragraphs in the counter affidavit, therefore, this Court refrains itself in passing a positive direction in favour of the petitioners.”
17. Before the writ Court, the records of which are attached with the present Letters Patent Appeal, the State of Jharkhand did not produce a copy of the agreement or any other document under which a claim for escalation in any eventuality has specifically been barred. The publication in the
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newspaper dated 1st February 2008 vide Annexure-7 to the writ petition mentions in paragraph 12 that agreement shall be executed after allotment of fund. It is not in dispute that the work order was issued on 31st July 2008 and the estimate for the work under the contract was to be prepared on the basis of schedule of rate of 2007. After the financial approval, administrative approval for the work under the contract was given on 10th January 2011 by the Principal Secretary of the Department and, as noticed above, allotment of funds was made till 2014-15 though the schedule time for completion of work was 30th January 2010. 18. In view of the aforesaid inter-departmental communications and communication with the writ petitioner which are brought on record of the writ Court, a question would arise whether the contractor is entitled for escalation in price. It is well-settled that in a proceeding under Article 226 of the Constitution the writ Court is obliged to render decision on the prayer(s) made in the writ petition and merely by observing that the claim for payment has been disputed and declined by the employer the writ petition cannot be dismissed, for it has to be seen whether the dispute raised by the other party has any substance or made only for the sake of raising a dispute – the question of maintainability on the ground of disputed questions of fact and alternative remedy are decided in the facts and circumstances of the case. 19. For the aforesaid reasons, finding serious infirmities in the impugned order dated 17th June 2019 passed in WP(C) No. 1280 of 2016 the same is accordingly set-aside. 20. This matter is remitted back to the writ Court for a decision on the prayers made in the writ petition. 21. LPA No. 497 of 2019 is allowed, in the aforesaid terms.