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2009 Supreme(Pat) 748
PATNA HIGH COURT
J.B.Koshy and Ravi Ranjan JJ.
United Breweries Limited, A Company Incorporated Under The Provisions Of The Companies Act, 1956 Through Its Branch Manager And Authorised Signatory Mea Usmani Son Of Md.Aslam
Versus
State Of Bihar Through The Secretary, Excise And Prohibition And Registration Department
Civil Writ Jurisdiction Case No. 2031 of 2009
Decided On : MAY 08, 2009
Headnote:Constitution of India-Article 226-Writ jurisdiction-Exercise of, in contractual matters-It is true that the contract between the parties is in the realm of private law-The dispute relating to interpretation of the terms and conditions of a contract could not have been agitated in a petition under Article 226 of the Constitution of India-In the present case, the contracts are between the corporation, which comes within the meaning of State and the fifth respondent, between the Corporation and the petitioner and between the petitioner and the fifth respondent, in accordance with the provisions under the Bihar Excise Act and the Rules made thereunder-The decision of Corporation to recover amount from the petitioner for paying to the fifth respondent is without any provisions of the Act, Rules or the contract between the parties and is an arbitrary exercise of power-The High Court will be free to interfere even in contractual matters, if the decision made is irrational or arbitrary. (Para 5)
Government Contract-Contract between the Corporation, the fifth respondent and the petitioner for supply of branded beer to the Corporation-Agreement providing arbitration clause-Petitioner raising a grievance against the order of the M.D. of the Corporation directing recovery of amounts from the running business of the petitioner for payment of the same to the fifth respondent-Complaint regarding nonpayment was required to be made by the fifth respondent within two months after the accounting year which was not so made-The real dispute is between the petitioner and the fifth respondent and the Corporation has no role in the matter-In case of dispute between the petitioner and the fifth respondent, fifth respondent should have resorted to the remedy of arbitration-The M.D. of the Corporation had no jurisdiction to recover the amount to be paid to the fifth respondent-Impugned order set aside. (Para 6)
(1994)6 SCC 651, (2004)3 SCC 553, AIR 1954 SC 592, (1986)1 SCC 264, (1983)3 SCC 379, (1979)3 SCC 489, (2008)3 SCC 440, (2009)3 SCC 553, (2009)1 SCC 150-Referred to.
J.B.Koshy, J.
1. The challenge in this writ application is against the order of the Managing Director of the Bihar State Beverages Corporation Ltd (the Corporation, in short) directing recovery of amounts from the running business of the petitioner for payment of the same to the fifth respondent. According to the petitioner, the order is unfair, arbitrary, unreasonable, intended to enrich the fifth respondent without any authority of law, without jurisdiction and against the provisions of the Liquor Sourcing Policy (the Liquor Policy, for brevity).
2. The Corporation was established by the State Government as a fully owned Government company entrusted with the monopolistic privilege of wholesale supply of liquor in the State of Bihar. The Corporation had framed its own policy and incorporated terms and conditions in the agreement executed between the manufacturers and suppliers of liquor. Annexure - 1 is the liquor policy of 2006 which was executed by the petitioner and the fifth respondent. As per the agreement, the terms and conditions incorporated in the agreement are binding on the parties. The petitioner and the fifth respondent are engaged in the manufacture and supply of reputed brands of beer in the State of Bihar. Since the Corporation was entrusted with the exclusive privilege of wholesale supply of all kinds of liquor in the State of Bihar and is licensed under Form I of the Bihar Excise Act, the petitioner and the fifth respondent, as per the agreements entered into between them, are bound to supply branded beer only to the Corporation. On 26.9.2006, the petitioner, to meet its ever-growing demand of its beer brands like Kingfisher, entered into an agreement with the fifth respondent to manufacture/bottle UBL brand, in accordance with the terms and conditions therein. The said agreement was amended incorporating certain relevant conditions on 28.12.2006, as is evident from Annexure - 2. On the basis of the agreement, the fifth respondent was authorised to manufacture beer by using the trade marks of the petitioner. The amended Clauses (1) and (2) of the agreement are as follows:
VARIABLE COST:
In addition to the retention for fixed cost (including power and fuel cost) by the Brewer, UBL shall reimburse the BREWER actual Variable Cost incurred on account of Raw Materials, Packing Materials, Bottles, Chemicals, Consumables and Water Charges.
It is agreed that Wastages shall not exceed the norms prescribed and agreed upon as mentioned in Annexure 1. Any Wastage in excess of that prescribed shall be compensated by the Brewer and deducted from the retention of the Brewer mentioned in Clause 8.
UBL shall arrange to procure Raw Materials, Packaging Materials, Bottles, Chemicals and Consumables, cost of which shall be borne by UBL. UBL shall, through the BREWERs common Bank Account to be operated exclusively by UBL, pay to all such Creditors directly for supplies received for production of UBLs Beer by the BREWER. UBL shall be responsible for all the above payments to the Creditors.
COLLECTIONS/COLLECTION ACCOUNT:
Wherever possible, the BREWER shall endorse all invoices in favour of UBL to facilitate receipts of payments in the name of UBL directly from the parties to whom supplies have been made under the advice of UBL.
The BREWER shall open a new account in a nationalized/scheduled bank call a Collection Account which shall be operated exclusively by two of UBLs nominees.
The BREWER undertakes to pass necessary Board Resolutions and keep the Bank informed of the Authorised Signatories or any change in the names of the Authorised Signatories. UBL shall provide the BREWER names of the Signatories whom they want to include in operating the said Account.
The BREWER shall not under any circumstances alter or change such signatories without the written approval of UBL.
In case it is not possible to endorse all invoices in favour of UBL, all collections from the sale of UBLs brands of Beer shall be deposited in the sai
