Back
1993 Supreme(Cal) 351
High Court Of Calcutta
S. K. SEN
ABUZAR M.HAKIMUDDIN - Appellant
Versus
UNION OF INDIA - Respondent
Matter . Of 1993
Decided On : 07/28/1993
A.K.CHOUDHARY, B.DEBNATH, DEBASIS KUNDU, R.K.CHAUDHARY, S.D.BANERJEE
The writ court has jurisdiction to interfere in contractual obligations where the State action appears to be arbitrary or unreasonable, and the State is bound to act fairly and in public interest.
Headnote:
CONTRACTUAL OBLIGATIONS - ARBITRATION - ENFORCEABILITY - JUDICIAL REVIEW - INTEREST - STATE ACTION - WRIT JURISDICTION: - The writ court has jurisdiction to interfere in contractual obligations where the State action appears to be arbitrary or unreasonable. - The State is bound to act fairly and in public interest, and its actions are subject to judicial review under Article 14 of the Constitution. - The arbitration clause in a contract does not bar the writ court's jurisdiction to enforce the equity and compel the Government or its agency to perform its part of the bargain. - The writ court can mould the relief to do justice between the parties and grant interest on the amount due under the contract.
Fact of the Case:
The petitioner, a firm, participated in tenders floated by Eastern Railway and supplied stores and materials at contracted rates. The Railway accepted and approved the supplies, but failed to make payment within the stipulated period. The petitioner filed a writ petition seeking payment of the outstanding dues along with interest.
Finding of the Court:
The court found that the Railway authorities had not disputed the particulars of the bills or raised any disputes or differences in connection with them. The C.B.I. investigation, which was initiated based on allegations of exorbitant rates and connivance with railway officers, found no evidence to support these allegations and the case against the petitioner was dropped. The court held that the Railway's contention that the bills were accepted was devoid of particulars and was made to raise false and frivolous disputes.
Issues: 1. Whether the writ court has jurisdiction to interfere in contractual obligations between the petitioner and the Railway. 2. Whether the arbitration clause in the purchase orders bars the writ court's jurisdiction. 3. Whether the Railway's failure to make payment within the stipulated period is arbitrary and unreasonable. 4. Whether the petitioner is entitled to interest on the outstanding dues.
Ratio Decidendi: 1. The writ court has jurisdiction to interfere in contractual obligations where the State action appears to be arbitrary or unreasonable. (Parameswarilall Puroshottalall and Another v. Food Corporation of India and Ors., Kumari Shrilekha Vidyarthi etc. v. Store of U.P. and others) 2. The arbitration clause in a contract does not bar the writ court's jurisdiction to enforce the equity and compel the Government or its agency to perform its part of the bargain. (Gujaral Steel Tubes etc. v. Gujarat Steel Tubes Mazdoor Sabha and Ors.) 3. The Railway's failure to make payment within the stipulated period is arbitrary and unreasonable, as there was no dispute or difference raised by the Railway authorities regarding the bills or the rates charged by the petitioner. 4. The petitioner is entitled to interest on the outstanding dues, as the Railway authorities have withheld payment without any reason.
Final Decision: The writ petition was allowed. The court directed the Railway to pay the outstanding dues of Rs. 26,31,361.20 along with interest at the rate of 11% from the respective dates of the bills within 30th September, 1993.
( 1 ) THE Court : The facts leading to this writ petition inter alia are that the writ petitioner firm participated in various tenders floated by Eastern Railway and quoted most reasonable prices for various types of stores and materials. Various tenders of the petitioners were accepted by the Railway and accordingly Railway placed diverse purchase orders, from time to time, on the writ petitioner firm at contracted rates.
( 2 ) PURSUANT to and in terms of the purchase orders placed by Eastern Railway the petitioner sold and delivered huge stores and materials, on diverse dates at the contracted price. The Respondent duly received, inspected, approved and accepted the said stores and materials without raising any disputes or differences whatsoever. The Bills raised and submitted by the petitioner were duly received and accepted by the respondents. It will be evident therefore that the petitioner had charged only the contracted rates and that the bills were duly being received by the respondents. There is not a single letter from the respondents raising my dispute or difference in connection with the said bills or any other bills of the petitioner firm.
( 3 ) THE terms and conditions incorporated in the purchase orders provides for payment of bills within 10 days from the date of submission thereof subject to a rebate of Rs. 25/- each bill being allowed. The petitioner accordingly gave a rebate of Rs. 25/- in each bill and became entitled to receive payment within 10 days from the respective dates of bills. Such terms and conditions for payment within 10 days have not been disputed by the respondents in any manner whatsoever.
( 4 ) THE respondent Easter Railway failed and neglected to make Payment of the bills of the petitioner either within the stipulated period of 10 days or any time thereafter till date. In the premises by January 1991 an aggregate sum of Rs. 26,11,361. 20 became outstanding and due and payable by Eastern Railway to the petitioner firm particulars whereof have been mentioned in the writ petition.
( 5 ) THE respondent Railway authorities have not denied or disputed the aforesaid particulars of bills in affidavit in opposition or otherwise.
( 6 ) IN spite of repeated demands requests and reminders the respondents maintained a complete silence and for the Just time the respondents in their letter dated 22/24 September, 1992 informed Mr. Sultan Ahmed in Connection with the non-payment of the said dues of the petitioner firm that the matter is being examined. However, by another letter dated October 29, 1990 addressed to Sari Sultan Ahmed the respondents informed that the investigation by C. B. I. against the petitioner firm is going on and under the circumstances final decision would have to wait the outcome of the C. B. I. investigation.
( 7 ) IT has been contended on behalf of the petitioner that although originally in F. I. R. the address of the petitioner No. 2 was shown as 30, Strand Road, Calcutta but C. B. I. amended the same. The General Manager of Eastern Railway also in writing dated 10th September, 1992 confirmed the same besides certifying that the petitioner No. 2 featured under C. B. I. investigation. In this connection, I may take note of the letter dated 10th September, 1992 issued by the General Manager which has been annexed to the writ petition.
( 8 ) THE allegations made against the petitioner firm before the C. B. I. were to the effect that certain requisitioning officers of the respondents in connivance with the petitioner firm purchased equipments beyond the actual requirement and that to at exorbitant price causing loss to the Railway. On the basis of the aforesaid allegation the Central Bureau of Investigation registered First Information Report and also started a case inter alia against the petitioner firm being No. RC. 13 (A) /90 before the Learned Court of Special Judge, C. B. I. , Patna.
( 9 ) THE C. B. I. investigated the whole matter and found that officers of
