(PRAYER: Appeals filed under Clause 15 of the Letters Patent against the common order of the learned single Judge dated 27.04.2012 passed in W.P.Nos.12458 and 12462 of 2011.)
The Hon’ble Chief Justice
These appeals have been preferred against the common order of the learned single Judge dated 27.04.2012 passed in W.P.Nos.12458 and 12462 of 2011.
2. The facts of the case lie in a narrow compass. Since, in the both the writ petitions, the parties are one and the same, and the issues involved are also one and the same, for the sake of convenience the facts in W.P.No.12458 of 2011 alone are being referred to by us.
3. It is stated that the Chennai Petroleum Corporation Limited (CPCL), the appellant – Corporation herein, is a Public Limited Company and is a Group Company of Indian Oil Corporation. The Corporation invited tenders for providing transportation services at their Manali Refinery by hiring (i) Ambassador Car (Non A/C and AC) (W.P.No.12458 of 2011) (ii) Seven Tempo Travellers (W.P.No.12462 of 2011) at their Manali Refinery. The respondent herein – writ petitioner, who is a Transport Contractor, sent her bid on 10.10.2005 for both the contracts. Later it was informed by the Appellant-Corporation that she was the successful bidder for both the contracts, and orders of contract were also received by the respondent – writ petitioner through fax on 27.01.2006. On the basis of that the respondent – writ petitioner also started operating transport facilities since 01.02.2006 as per the tender conditions. Later on the respondent – writ petitioner was informed by the appellant – Corporation through their letter dated 13.02.2006 that during execution of the contract any additional quantity over and above SOR quantity shall be operated as per rates finalized for similar services under casual booking, which will be informed to the contractor at an appropriate time. According to the respondent –writ petitioner, the said clause was not found place in the original Tender Notice and also in the fax of acceptance dated 27.01.2006. Therefore, the respondent – writ petitioner sent a letter dated 23.01.2006 informing the appellant – Corporation that the said new clause is against the original tender conditions, and therefore, the respondent – writ petitioner is continuing performance of her contractual obligations by ignoring the said new clause, as it is an afterthought on the part of the appellant – Corporation. It is stated that, thereafter, the respondent –writ petitioner did not receive any reply from the appellant – Corporation, and therefore, she continued to perform her contractual obligations hoping that the appellant – Corporation accepted the original offer price and the impugned condition in Clause 12.3 of the contract would not bind her. It is stated that the respondent – writ petitioner sent the monthly bills to the appellant-Corporation every month for payment, but each time the appellant- Corporation had paid only a part of the sum claimed and had failed to pay the remaining sum month after month. Even then, the respondent –writ petitioner continued her services hoping that the appellant - Corporation would pay all dues in course of the contractual period. It is stated that even though the original tender period was for twenty four months, yet it was later on extended for a further period of ten months i.e., up to 30.11.2008. The respondent – writ petitioner continued her services till the completion of the entire contractual period viz., 30.11.2008. But, she was not paid with the dues even after repeated demands. After the contract period was over, the respondent - writ petitioner sent a letter dated 15.03.2011 requesting payment as per the original schedule rates and not as per the varied rate. But, the said request of the respondent – writ petitioner was rejected by the appellant – Corporation vide their letter dated 03.06.2011. Hence, the respondent –writ petitioner moved two writ petitions (in respect of two contracts) before the learned single Judge.
4. Learned single Judge, after hearing the learned counsel on either side and after perusing the materials on record held, in both the writ petitions, that the impugned Clause 12.3 in the Letter of Acceptance dated 27.01.2006 was unilaterally introduced by the appellant – Corporation stating that the additional quantity over and above SRO quantity would be operated as per casual booking rate, and therefore, it will not be binding on the writ petitioner – respondent herein, and directed the appellant – Corporation to pass appropriate orders and pay the amounts due to the writ petitioner – respondent herein after considering her representation dated 15.03.2011 within eight weeks from the date of receipt of a copy of his order. Aggrieved by the said order of the learned single Judge, the appellant – Corporation has preferred these appeals.
5. Mr.R.Senthil Kumar, learned counsel appearing on behalf of the appellant-Corporation submitted that in the impugned contract there was a clause for arbitration, and it was also brought to the notice of the learned single Judge, at the time of hearing, but even then the learned single Judge ignored it and concluded that the parties need not be referred to arbitration. He further submitted that the acceptance or non-acceptance of the variation in the rate schedule is a disputed fact. When there is a clause for arbitration in the impugned contract, it ought to have been adjudicated only by arbitration and not in a writ petition filed under Article 226 of the Constitution. He submitted that the learned single Judge is erred in adjudicating a monetary claim, arising out of a commercial contract, and declining it to refer for arbitration, that too when a specific request was made by the appellant – Corporation. Learned counsel for the appellant – Corporation relying upon the decisions of the Supreme Court in Godavari Sugar Mills Limited Vs. State of Maharashtra reported in (2011) 2 SCC 439 and Hindustan Petroleum Corporation Limited Vs. Dolly Das reported in (1999) 4 SCC 450 submitted that unless constitutional or statutory rights are involved no writ can be issued, but the learned single Judge made a grave error in entertaining the writ petitions, where the issues involved are purely commercial in nature. He further submitted that the learned single Judge erred in concluding that the respondent – writ petitioner did not accept the clause fixing rates for quantities exceeding SOR quantities at casual booking rates, which is completely contrary to the letter of acceptance dated 13.02.2006. Learned counsel submitted that the variation is not a unilateral one as contended by the respondent – writ petitioner. It was there in the contract signed by both the parties. He submitted that the learned single Judge is erred in concluding that the objection letter dated 23.02.2006 sent by the respondent – writ petitioner has the effect of cancelling the consent conveyed by signing the letter of acceptance. He further submitted that the learned single Judge has made a grave error in directing the appellant-Corporation to pay the amounts as demanded by the respondent – writ petitioner in her letter dated 15.03.2011, even without verifying the accuracy of the amounts so claimed. He submitted that it is very unfair on the part of the respondent – writ petitioner to claim extra payment, when she accepted the monthly payments made by the appellant – Corporation, without any demur or protest, during the entire period of contract, including the extended period of contract, as per the original contractual terms, including the terms relating to quantities above the SOR quantities. He further submitted that the respondent – writ petitioner slept over the entire contractual period i.e., between 2005-2008 and did not made her claims either in the manner required as per the contract or otherwise, and therefore, she is not entitled to the relief, as sought for, on account of waiver, acquiescence, estoppel, limitation and laches on her part. He further submitted that the learned single Judge miserably failed to consider the fact that subsequent to the letter sent by the respondent – writ petitioner dated 23.02.2006, she has again accepted the casual booking rates offered by the appellant – Corporation under the contract, by endorsing and counter signing the letter dated 19.09.2006 sent by the appellant – Corporation in respect of casual booking rates. Since, the respondent – writ petitioner has expressly agreed to the casual booking rates as quoted by the appellant – Corporation, it estopped from claiming any amounts from the appellant – Corporation almost three years after the completion of the contract. Learned counsel submitted that in the absence of relevant documents on record to prove the quantum and genuineness of the outstanding amounts allegedly claimed by the respondent – writ petitioner, the learned single Judge ought not to have directed for payment of the same. More over, it involves disputed facts which have to be decided by adducing evidence. Therefore, the mere direction of the learned single Judge for the payment of the same, without examining the merits of the claim, needs interference.
6. Mrs.Dhakshayani Reddy, learned counsel appearing for the respondent – writ petitioner, referring to the counter affidavit filed before us, submitted that after the conclusion of the contract and commencement of the work, the appellant – Corporation issued a letter dated 13.02.2006 unilaterally varying the terms of the contract by inserting Clause 12.3 to the effect that any additional quantity over and above the specified kilometers will be charged on casual booking rates only. Immediately on receipt of the said letter, the respondent – writ petitioner conveyed her protest vide her letter dated 23.02.2006, and informed the appellant – Corporation that Clause 12.3 is not acceptable to her, since it never found place in the original contract. It was also clarified in the said letter that the respondent – writ petitioner would only adhere to the original contractual terms, and not bound by the subsequent variation.
7. Learned counsel further submitted that the respondent – writ petitioner was also awarded with a contract for providing transportation services by Ambassador Car at the Manali Refinery of the appellant – Corporation for the subsequent years viz., 2008-2010 on 29.08.2008. Even under the said new contract the appellant – Corporation has large dues payable to the respondent – writ petitioner.
8. Learned counsel submitted that according to the respondent – writ petitioner the following are the sums due and payable under the contract involving Ambassador Cars (W.A.No.1567 of 2012).
Total Bill Amount :: Rs. 95,85,474
Received Amount :: Rs. 60,58,377
Balance Amount :: Rs. 35,27,097
Fuel Escalation Charges :: Rs. 6,36,244.20
Net Total :: Rs. 41,63,341.20
In the other contract for the use of 7 Tempo Travellers (W.A.No.1568 of 2012) the following are the sums due and payable to the respondent – writ petitioner.
Total Bill Amount :: Rs. 1,24,12,150
Received Amount :: Rs.1,10,92,381
Balance Amount :: Rs.13,19,769
9. Learned counsel for the respondent – writ petitioner further submitted that since the appellant – Corporation had unilaterally varied the terms of the contract, and it being a public limited company, writ will lie, and therefore, the learned single Judge was perfectly right in entertaining the writ petition and giving direction for payment of the dues. According to the learned counsel for the respondent – writ petitioner the order of the learned single Judge was well considered and it needs no interference.
10. As regards arbitration clause in the contract, the learned counsel for the respondent – writ petitioner contended that arbitration is confined only to the disputes arising out of the contract. According to Clause 19 of the Special Conditions any dispute arising out of the contract alone can be resolved through arbitration. But, in the instant case, a concluded contract was later on unilaterally varied by the appellant – Corporation by inserting Clause 12.3 in the letter of acceptance dated 13.02.2006, which was never accepted by the respondent-writ petitioner as part of the concluded contract, and therefore, it cannot be said that the dispute involved has arisen out of the contract between the parties. Learned counsel further submitted that the learned single Judge was absolutely right in holding that even if there is an arbitration clause in the agreement, in case of violation of principles of natural justice a writ can be maintainable.
11. As regards the contention that no writ will lie in contractual matters, the learned counsel for the respondent –writ petitioner submitted that even disputed versions of fact can be gone into in writ jurisdiction in deserving cases.
12. On the allegation of laches on the part of the respondent – writ petitioner, the learned counsel submitted that the respondent –writ petitioner never failed on her part to claim the dues. She raised her monthly bills regularly on the basis of the original/unaltered terms of the contract, but only the appellant – Corporation failed in making its payments.
13. Finally, the learned counsel for the respondent – writ petitioner submitted that the appellant – Corporation has unilaterally varied the contractual conditions after the contract was concluded. The respondent – writ petitioner was never called upon for any negotiation after the conclusion of the contract for changing the terms in the original contract. Further, the respondent –writ petitioner never agreed to such a variation in the original contract, and always raised the monthly bills as per the original contractual terms. The arbitration clause does not apply to the instant issue, since it confined only to any dispute which arises under the original contract. Saying so, she sought for the dismissal of both the writ appeals.
14. We have considered the case of the respective parties and the submissions made by the learned counsel appearing on their behalf. Some of the relevant facts, which are not in dispute, are summarized herein below.
15. The appellant – Chennai Petroleum Corporation Limited invited tenders for providing transportation services at their Manali refinery by hiring Ambassador Cars and Tempo Travellers. The said tender notice contained special terms and conditions of the contract. The respondent herein/writ petitioner/contractor submitted her tender and she was finally declared as successful bidder. The appellant – Corporation by fax dated 27.01.2006 informed the respondent – contractor about the acceptance of her bid and awarding of the contract in her favour. In the fax of acceptance dated 27.01.2006, it was categorically mentioned by the appellant-corporation that a detailed letter of acceptance will follow. Thereafter, a detailed letter of acceptance was issued on 13.02.2006. The relevant portions of the letter of acceptance dated 13.02.2006 are extracted hereinbelow:-
No.1, Vasantha Garden Street,
Chennai – 600 023.
Sub: Providing Transportation Services by Ambassador Car (Non A/C and A/C) at Manali Refinery/Corporate office of CPCL.
1) Our press tender NIT No.CPCL/CC/T-035(C)/2005-06
2) Our Corrigendum-I dated 30.09.2005
3) Your offer dated 10.10.2005
4) Our Fax of Acceptance dated 27.01.2006
With reference to your offer, subsequent discussions and our Fax of Acceptance dated 27.01.2006 for the subject work, we are pleased to issue this detailed Letter of Acceptance to you, subject to the following:-
1. CONTRACT VALUE
The estimated contract value of the subject work shall be Rs.21,99,145/- (Rupees twenty one lakh ninety nine thousand one hundred and forty five only) per annum as per the item rates and quantities enumerated in the enclosed Schedule of Rates marked as Annexure – I to this Letter of Acceptance. The actual contract value shall however be subject to variation based on actual quantities of work executed, measured jointly and accepted for payment by the Officer-in-Charge.
12.3 The rate quoted by the contractor for Item 1(a), 1(b), 2(a) and 2(b) shall be restricted to the quantity given in the Schedule of Rates (SOR) only. During execution, any additional quantity over and above SOR quantity shall be operated as per rates finalized for similar services under casual booking, which will be informed to the contractor at an appropriate time.
This Letter of Acceptance along with all its enclosures and Schedule of rates (Annexure – I) is being issued to you in DUPLICATE. You are requested to return one copy of the same duly signed and stamped in each page as a token of your acceptance.
Very truly yours,
FOR AND ON BEHALF OFCHENNAI PETROLEUM CORPORATION LTD.,
SENIOR MANAGER (CONTRACTS CELL)'
16. Learned counsel appearing for the respondent-contractor mainly contended that the contract was concluded on 27.01.2006 itself, when the acceptance was first communicated by fax. In our considered view, this submission cannot be accepted for the reason that in the fax of acceptance dated 27.01.2006 itself, the respondent-contractor was informed that a detailed letter of acceptance will follow. Subsequently, a detailed letter of acceptance was also issued by the appellant-Corporation on 13.02.2006, wherein a special request was made to the respondent-contractor to return one copy of the same, duly signed and stamped in each page, as a token of acceptance. It has not been disputed by the respondent – contractor that it was countersigned by her as requested by the appellant-corporation. In our view, therefore, the contract was concluded only after the detailed letter of acceptance was finally signed and countersigned by the parties concerned. However, the appellant-Corporation has not disputed the fact that after the detailed letter of acceptance was countersigned, the respondent-contractor by her letter dated 23.02.2006 informed the appellant-Corporation that there is variation in the conditions contained in the tender notice and insertion of new clause would not be acceptable for the reason that this was nowhere mentioned in the notice inviting tenders, and also in the fax of acceptance dated 27.01.2006.
17. Now, the question that falls for consideration is which forum has to decide the dispute with regard to variation in, and interpretation of, the contractual terms.
18. Admittedly, the agreement contains an arbitration clause, which reads as follows:-
Any dispute arising out of this contract shall be settled as per the Arbitration and Conciliation Act, 1996 of the Government of India, in the case of dispute between the owner and non-public sector contracts and as per the directives of the Department of Public Enterprises in case of disputes between the owner and Public Sector Enterprises.
i. Any dispute or difference whatsoever arising between the parties and of or relating to the construction, interpretation, application, meaning, scope, operation or effect of this contract or the validity or the breach thereof, shall be settled by arbitration in accordance with the SCOPE Forum of Arbitration Rules framed by the Standing Conference of Public Enterprises (SCOPE) and the award made in pursuance thereof shall be final and binding on the parties.
ii. Notwithstanding the amount of claim, all the disputes or differences shall be settled by a Sole Arbitrator in accordance with SCOPE Forum of Arbitration Rules.
iii. The venue of Arbitration shall be Chennai, India and the Arbitration Proceedings shall be conducted and the award shall be rendered in English.
iv. The Arbitrator shall give a speaking award.
v. The Arbitrator shall render the award within six months of the commencement of the Arbitral Proceedings, which period may be enlarged by consent of both the parties.
vi. The cost of Arbitration Proceedings shall be borne by both the parties equally.
vii. Interest, if awarded by Arbitrators, shall be at a rate not exceeding the cash credit rate prevailing on the date of the award.'
19. From a bare reading of the aforesaid clause, we have no doubt in our mind, that the dispute raised by the respondent-contractor, with regard to variation in the original contract, can only be resolved and settled through arbitration, in the manner provided therein.
20. Learned single Judge misdirected himself in holding that a new clause was unilaterally introduced by the appellant – Corporation, which will amount to violation of the principles of natural justice, and therefore, it is amenable to writ jurisdiction. Learned single Judge failed to take note that the detailed letter of acceptance was countersigned by the respondent-contractor, and few days thereafter, objection was raised with regard to insertion of a new clause in the letter of acceptance countersigned by the respondent-contractor. Learned single Judge further relied upon a decision of the Supreme Court in the case of HarbanslalSahnia Vs. Indian Oil Corporation reported in 2003 (1) CTC 189 = AIR 2003 SC 2120 for the proposition that a writ is maintainable for violation of principles of natural justice notwithstanding the arbitration clause contained in the contract. With due respect, we are of the view that the ratio decided by the Supreme Court in the above referred to case will not apply to the facts of the present case. In Harbanslal’sCase (supra) the facts were that the writ petitioner therein was appointed as a dealer by the Indian Oil Corporation in petroleum products. The officers of the Corporation visited the retail outlet of the petitioner and an inspection was carried out. After the inspection, a show cause notice was served on the writ petitioner requiring him to explain why density record was not maintained on day-to-day basis, and secondly, why the writ petitioner did not co-operate with the officers who had come to inspect the retail outlet, and instead used un-parliamentary language and displayed discourteous behaviour. The sample of SKO was taken jointly by the Sub-Divisional Magistrate and officials of the Corporation, and after lab test some infirmity was found. After show cause notice the writ petitioner-appellant was slapped with a termination order, whereby his dealership was terminated forthwith. The said termination was challenged by filing a writ petition. On these facts, their Lordships of the Supreme Court held that since there was violation of the principles of natural justice in terminating the dealership, the action is amenable to writ jurisdiction, in spite of the presence of arbitration clause in the dealership agreement. In the instant case, the dispute raised by the respondent - contractor is with regard to the payment of an additional amount on transportation charges, which was disowned by the appellant – Corporation, because of the conditions contained in the detailed letter of acceptance. A three judges’ bench of the Supreme Court (J.C. Shah, V. Ramaswami and A.N. Grover, JJ.), in the case of Union of India vs. Saleem Timber & Construction Co. (India) reported inA.I.R. 1969 S.C. 488, after discussing various earlier decisions, held that the test for determining whether a dispute is one ‘arising out of the contract’ or ‘in connection with the contract’ is whether recourse to the contract by which both the parties are bound is necessary for the purpose of determining whether the claim of the party is justified or otherwise. If it is necessary to take recourse to the terms of the contract for the purpose of deciding the matter in dispute, it must be held that the matter is within the scope of the arbitration clause and the arbitrators have jurisdiction to decide that dispute. Therefore, in our view, a writ court cannot decide a money claim made by a contractor arising out of a contract containing an arbitration clause.
21. In the case of State of U.P. Vs. Bridge & Roof Company (India) Ltd., reported in (1996) 6 SCC 22 their Lordships of the Supreme Court observed:-
'There is yet another substantial reason for not entertaining the writ petition. The contract in question contains a clause providing inter alia for settlement of disputes by reference to arbitration (Clause 67 of the Contract). The Arbitrators can decide both questions of fact as well as questions of law. When the contract itself provides for a mode of settlement of disputes arising from the contract, there is no reason why the parties should not follow and adopt that remedy and invoke the extra-ordinary jurisdiction of the High Court 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 extra-ordinary jurisdiction under Article 226, The said Article was not meant to supplant the existing remedies at law but only to supplement them in certain well- recognised situations. As pointed out above, the prayer for issuance of a writ of mandamus was wholly misconceived in this case since the respondent was not seeking to enforce any statutory right of theirs nor was it seeking to enforce any statutory obligation cast upon that appellants. Indeed, the very resort to Article 226-whether for issuance of mandamus or any other writ, order or direction -was misconceived for the reasons mentioned supra.'
22. In State of Jammu and Kashmir Vs. Ghulam Mohd. Dar & Another reported in (2004) 12 SCC 327 the appellant therein issued an advertisement inviting tenders for the works, namely, construction of Radiotherapy Mortuary workers facility, pump house and guard room. Respondent No. 1 therein responded to the said advertisement
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and submitted his tender, which was accepted by the appellant. An agreement was entered into between the parties on 14.12.79. The agreement contained an arbitration clause. The respondent was able to complete the construction by November, 1983. Under such circumstances, he gave an application to the Chief Engineer wherein it was submitted that the escalation of 42% has not been paid in respect of certain items of which escalation is provided under the principal agreement. However, the Chief Engineer informed the respondent that the escalation was applicable to all the items as per the decision of the Standing Finance committee. The respondent filed a petition in the High Court of Jammu and Kashmir seeking mandamus that the appellant be directed to pay 42% escalation rates as approved under the supplementary agreement and confirmed by the letter dated 5.5.1986 of the Chief Engineer. The High Court allowed the writ petition and issued a direction in terms of the prayer made in the writ petition. A Letters Patent Appeal filed by the appellant was dismissed. Therefore, appellant moved the Supreme Court. In the aforesaid facts, the Supreme Court held as follows:- '3. It is not disputed that the contract agreement entered into by and between the parties contain an arbitration agreement. Furthermore, the respondent herein filed the aforementioned writ petition for enforcing a contract qua contract. Although an objection has been taken as regards the maintainability of the writ petition by the appellant herein, the same unfortunately has not been considered by the High Court. It is well settled that writ of or in the nature of mandamus would not ordinarily issue for enforcing the terms and conditions of a contract qua contract. A writ of mandamus would issue when a question involving public Law character arises for consideration. It is also well settled that the High Court would not entertain a writ petition involving disputed questions of fact. Keeping in view, the aforementioned well settled principles of law, the impugned judgments cannot be sustained. They are set aside accordingly……………' 23. Having regard to the facts of the case and in the light of the proposition laid down by the Supreme Court in the cases referred to supra, we are of the definite view that the learned single Judge ought not to have directed the appellant – Corporation to consider the respondent –writ petitioner’s claim and pay the amounts, disputed by the appellant – Corporation. Further, we are of the view that the only remedy available to the respondent-Contractor is to invoke the arbitration clause in accordance with law. 24. For the aforesaid reasons, both the appeals are allowed and the common order of the learned single Judge dated 27.04.2012 passed in W.P.Nos.12458 and 12462 of 2011, which is impugned in these appeals, is hereby set aside. No costs. Consequently, connected miscellaneous petition is closed.