Kisan Sahkari Chini Mills Ltd. vs Vardan Linkers

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2008 Supreme(SC) 654

R. V. Raveendran & Lokeshwar Singh Panta
Kisan Sahkari Chini Mills Ltd. & Ors - PETITIONERS
Versus
Vardan Linkers & Ors - RESPONDENT
WITH
State of Uttaranchal - Appellants
Versus
Vardan Linkers & Ors. - Respondents
AND
Doiwala Sugar Company Ltd. & Anr. - Appellants
Versus
Vardan Linkers & Ors. - Respondents
Appeal (civil) 5543 of 2004
CIVIL APPEAL NO. 5544 OF 2004
CIVIL APPEAL NO. 5545 OF 2004
Decided on : 15/04/2008

Headnote:Constitution of India - Article 226 - Specific Relief Act, 1963 - Section 12 - Breach of contract-Remedy-Ordinarily, remedy available for a party complaining of breach of contract lies in seeking damages-He will be entitled to the relief of specific performance if the contract is capable of specifically enforced in law-Remedies for breach of contract being purely in the realm of contract are dealt with by civil courts-Public law remedy by way of writ petition, is not available to seek damages for breach of contract or specific performance of contract-However, where contractual dispute has a public law element, power of judicial review under Article 226 may be invoked. (Para 15)
       Constitution of India - Article 226 - Judicial review of administrative action - When there is a contractual dispute with a public law element, and a party chooses the public law remedy by way of a suit, he will not get a full-fledged adjudication of his contractual rights, but only a judicial review of administrative action - Question whether there was a contract and whether there was a breach may be examined incidentally while considering the reasonableness of administrative action-But where the question of contract is seriously disputed, High Court can not assume that there was a valid contract and on that basis, examine the validity of administrative action. (Para 17)
       Specific Relief Act, 1963 - Section 12 - Cancellation of order granting permission to lift molasses-Order of cancellation quashed by High Court-Various serious irregularities were noticed by Secretary (Sugar) in his detailed and reasoned order whereby he directed cancellation of the letter issued by Assistant Cane Commissioner permitting first respondent to lift molasses-Offer was not made by first respondent as a bonafide consumer but as a non-consumer trader-There was no valid offer at all by first respondent-No material before High Court to assume or come to the conclusion that there was a concluded contract for supply of molasses-Appeals allowed-Impugned judgment set aside. (Paras 28, 32, and 34)
       Specific Relief Act, 1963-Section 12-Before court can record a finding as to whether there is a contract, it has to find out who are the parties to the contract, when and what was the offer, whether there was acceptance, and whether the offer and acceptance were valid-None of these addressed nor answered by High Court-Order of cancellation passed by Secretary was fully justified and in public interest-If that order did not suffer from an infirmity which required correction by application of principles of Administrative Law, High Court ought not to have interfered with it-There was no justification for invoking the principles of legitimate expectations, estoppel, acquiescene and principle of part performance to make out a contract, where none existed or to give directions to five independent sugar mills to supply huge quantities of molasses to first respondent without any contract on an admittedly low price. (Para 32)
       (1981)3 SCC 235; (1994)3 SCC 552; (1990)3 SCC 752; (2001)8 SCC 344 - Referred to.

JUDGMENT:

Lokeshwar Singh Panta, J.

These appeals by special leave filed by Kisan Sahkari Chini Mills Limited, Sitarganj, Gadarpur and Nadehi [Civil Appeal No. 5543/2004], State of Uttaranchal [Civil Appeal No. 5544/2004], and Doiwala Sugar Company Limited and Kichha Sugar Company Limited [Civil Appeal No. 5545/2004] are directed against the final judgment and order dated 28-7-2004 passed by the Division Bench of the High Court of Uttaranchal in Writ Petition No. 318/2004 filed by Vardan Linkers, a proprietary concern of B.B. Singh, first respondent in these appeals. By the impugned judgment, the High Court allowed the said writ petition and quashed the order dated 24.4.2004 of the Secretary, Cane Development and Sugar Industries, whereby the order dated 26.03.2004 of the Assistant Cane Commissioner, Udham Singh Nagar, granting permission to the first respondent to lift 85,000 quintals of molasses from the five sugar mills at a price of Rs.127/- per quintal was cancelled.

Factual Background :

2. It is stated that there are six State controlled sugar mills in the State of Uttaranchal, which produce molasses as a bye-product. Of them, two mills - Doiwala Sugar Company Limited and Kichha Sugar Mills Limited - are Government Companies. The other four are in the co-operative sector, namely, Kisan Sahkari Chini Mills Limited at Nadehi, Gadarpur, Sitarganj and Bhajpur. Sale of molasses produced by these six sugar mills was controlled through the Molasses Sales Committee constituted by the State Government vide order dated

25.3.2003, with the following nine Members:

(i) Commissioner, Kumaon Mandal, Nainital - Chairman

(ii) District Magistrate, Udham Singh Nagar - Member

(iii) Six General Managers of the four Cooperative Sugar Mills and two Sugar Companies - Members

(iv) Assistant Cane Commissioner, Udham Singh Nagar - Secretary

The said order made it clear that molasses of the six sugar mills shall be sold only through the said Committee. The State Government policy at the relevant time required molasses produced by these sugar factories to be disposed in the following manner: 70% to distilleries and chemical factories in the State; 10% to manufacturers of country liquor within the State; and 20% to bona fide consumers (distilleries and chemical industries). No allottee who got allotment as a bona fide consumer could transfer the allotment to anyone else.

3. The Kisan Sahkari Chini Mills Limited, Gadarpur, issued a tender notice (published in Amar Ujala dated on 23.2.2004) inviting offers from bona fide consumers for purchase of B grade molasses produced by five sugar mills at Gadarpur, Nadehi, Sitarganj, Doiwala and Kiccha. Tenderers were required to submit their tenders to the Assistant Cane Commissioner, Udham Singh Nagar, specifying the name of the Sugar Mills from which he wanted to purchase molasses and the quantity. The tender had to be accompanied by an earnest money of Rs.1,00,000/- in respect of each sugar mill from which the tenderer wanted to buy molasses.

4. In response to the tender notice, first respondent and others submitted their tenders, which were opened on 1.3.2004 at 3.30 PM by the Assistant Cane Commissioner, Udham Singh Nagar, in the presence of the General Manager, Gadarpur, the Purchase Clerk of Sitarganj Mills and Molasses Clerk of Nadehi Mills. The first respondents tender was for purchase of 15,000 quintals of molasses from Kisan Sahakari Chini Mills Limited, Nadehi, at a price of Rs.101/- per quintal. The said offer contained a note to the effect that "we will lift molasses in favour of distilleries of UP, Punjab and Haryana". The first respondent did not enclose any earnest money with the tender, but stated that a sum of Rs.1,00,000/- was already deposited with the Nadehi Sugar Mill. The first respondent did not make any offer for purchasing molasses from the other four mills. As the prices offered by the tenderers were found to be very low, negotiations were held by the Assistant Cane Commissioner with

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2008 Supreme(SC) 654

Cases Referred (2)