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2009 Supreme(Cal) 5
IN THE HIGH COURT AT CALCUTTA
Debasish Kar Gupta, J.
Jayanta Kumar Pan & Anr. – Petitioners
Versus
Bharat Petroleum Corporation Ltd. & Ors. – Respondents
W.P. No. 5089 (W) of 2006
Decided On : January 9, 2009
Advocate Appeared:
Mr. Kalyan Bandyopadhyay, Mintu Goswami and Kishor Dutta for the Petitioners
Mr. Arunava Ghosh, Sanjib Kumar Mal and Bimalendu Das for the Respondents
The principles for determining the maintainability of a writ petition in the contractual field where the State or its instrumentality is a party are as follows: (a) The remedy of Article 226 of the Constitution is available in cases where the Government exercises its contractual powers but judicial review is intended to prevent illegality, irrationality, arbitrariness, discrimination or procedural impropriety, subject to satisfactory adjudication upon facts of that case necessitating proper pleading supported by acceptable evidence without requiring further oral evidence or any external aid. (b) The remedy of Article 226 of the Constitution is available in cases where a direction upon the State or its instrumentality to adhere to the contract is prayed for, provided the dispute can be settled by looking upon the terms of the contract and without requiring consideration of any other evidence and/or external aid other than what are already on record. (c) The remedy of Article 226 of the Constitution is available in cases relating to contractual matter where the administrative action of the State or its instrumentality is violative of the provisions of Article 14 of the Constitution of India provided there is no disputed question of fact. (d) The remedy of Article 226 of the Constitution is available in cases of commercial contract where the action of the State, its instrumentality, any public authority or person whose actions bear insignia of public law element. (e) The remedy of Article 226 of the Constitution is available in cases where State and its instrumentalities are exempted from operation of rent control legislation provided the State or its instrumentality violates the mandates of Article 14 of the Constitution.
Headnote:
WRIT PETITION - MAINTAINABILITY - CONTRACTUAL FIELD - JUDICIAL REVIEW - PUBLIC LAW ELEMENT - STATE OR ITS INSTRUMENTALITY - ARBITRARINESS - DISCRIMINATION - JUDICIAL REVIEW - GROUNDS - ILLEGALITY - IRRATIONALITY - PROCEDURAL IMPROPRIETY - ARTICLE 14 VIOLATION - ENFORCEABILITY OF QUA-CONTRACT - DISTINCTION BETWEEN PUBLIC LAW AND PRIVATE LAW REMEDY - JUDICIAL DISCRETION - DISPUTED QUESTION OF FACT - AVAILABILITY OF ALTERNATIVE REMEDIES - PRINCIPLES FOR MAINTAINABILITY OF WRIT PETITION IN CONTRACTUAL FIELD.
Fact of the Case:
The petitioners were running a retail dispensing pump under the name and style "Kamala Auto Stores" at G.T. Road, Nurkona, District Burdwan on the strength of dispensing pump and selling licence dated April 20, 1997 (hereinafter referred to as the said agreement) for sale of petroleum products namely, Motor Spirit, Hi-Speed Diesel etc., produced by the Bharat Petroleum Corporation Ltd. The respondent No. 3 issued a show-cause notice dated August 8, 2005 to the petitioners to show-cause as to why the retail outlet of the petitioners had been found dry of HSD during inspection on August 7, 2005. In reply the petitioners informed the respondent No. 3 on August 13, 2005 that the cause of drying out of HSD on August 7, 2005 was delay in receiving the supply of the product. Thereafter, the respondent No. 3 issued a show-cause notice dated August 23, 2005 to the effect as to why the respondent authority would not take action against the petitioners' dealership for violation of Clause 13a of the said agreement. The above show-cause notice further contended that indent for supplying HSD had been placed by the petitioners on August 8, 2005 and the same was supplied on the same day. On January 30, 2006 the petitioners received another communication from the Assistant Manager, Sales and Engineer, Durgapur of the respondent No. 3 to the effect that during his visit to the retail outlet of the petitioner on January 27, 2006, the above outlet was found dry of Hi-Speed Diesel. Subsequently, the petitioners received a show-cause notice dated February 6, 2006 from the respondent No. 3 to show-cause as to why action should not be taken against the petitioners for violation of Clause Nos. 10(b)(j), 13a(ii)(v)(vii)(viii) of the said agreement dated April 20, 1997 on the basis of facts and circumstances mentioned in the above notice. The petitioner No. 1 as per his communication dated February 14, 2006 informed the respondent authority, of the following ground as the cause of his temporary reduction in placing orders for petroleum products:- (i) The petitioner No. 1 faced a car accident two months ago. (ii) Fifteen days ago fire broke out at his residence due to electric short-circuit and valuable goods were destroyed. Thereafter, by the impugned order dated February 24, 2006 the said agreement dated April 20, 1997 was cancelled by the respondent No. 3.
Finding of the Court:
The impugned order dated February 24, 2006 passed by the respondent No. 3 terminating the Dispensing Pump and selling licence (DPSL) agreement dated April 20, 1997 (Annexure P-9 at page 59 of the writ application) is quashed and set aside.
Issues: 1. Whether a writ petition is maintainable in the contractual field where the State or its instrumentality is a party? 2. What are the principles for determining the maintainability of a writ petition in the contractual field? 3. Whether the impugned order passed by the respondent No. 3 terminating the Dispensing Pump and selling licence (DPSL) agreement dated April 20, 1997 was arbitrary and violative of the principles of natural justice?
Ratio Decidendi: 1. A writ petition is maintainable in the contractual field where the State or its instrumentality is a party, subject to the following principles: (a) The remedy of Article 226 of the Constitution is available in cases where the Government exercises its contractual powers but judicial review is intended to prevent illegality, irrationality, arbitrariness, discrimination or procedural impropriety, subject to satisfactory adjudication upon facts of that case necessitating proper pleading supported by acceptable evidence without requiring further oral evidence or any external aid. (b) The remedy of Article 226 of the Constitution is available in cases where a direction upon the State or its instrumentality to adhere to the contract is prayed for, provided the dispute can be settled by looking upon the terms of the contract and without requiring consideration of any other evidence and/or external aid other than what are already on record. (c) The remedy of Article 226 of the Constitution is available in cases relating to contractual matter where the administrative action of the State or its instrumentality is violative of the provisions of Article 14 of the Constitution of India provided there is no disputed question of fact. (d) The remedy of Article 226 of the Constitution is available in cases of commercial contract where the action of the State, its instrumentality, any public authority or person whose actions bear insignia of public law element. (e) The remedy of Article 226 of the Constitution is available in cases where State and its instrumentalities are exempted from operation of rent control legislation provided the State or its instrumentality violates the mandates of Article 14 of the Constitution. 2. The remedy of Article 226 of the Constitution is not available: (a) To enforce a qua contract in connection with a contract between the staff and the State or its instrumentality on a quota of promotion which cannot be exalted into a service rule except in extreme cases which shocks the conscience of the Court or other extra ordinary situation. (b) In a case involving disputed question of unequal or discriminatory treatment by the officers of the State of persons governed by similar contracts without proper pleading and in absence of acceptable evidence-on-record. (c) Ordinarily, in a case where a breach of contract is complained of and the party complaining of such breach can sue for specific performance of the contract, if contract is capable of being specifically performed or the party can sue for damages. 3. The impugned order passed by the respondent No. 3 terminating the Dispensing Pump and selling licence (DPSL) agreement dated April 20, 1997 was arbitrary and violative of the principles of natural justice as the grounds mentioned in the impugned order were absent in the show-cause notices and the petitioners were not given a reasonable opportunity to deal with those grounds.
Final Decision: The impugned order dated February 24, 2006 passed by the respondent No. 3 terminating the Dispensing Pump and selling licence (DPSL) agreement dated April 20, 1997 is quashed and set aside.
The judgment of the Court was as follows:-
The subject-matter of challenge in this writ application is the order dated February 24, 2006 passed by the respondent No. 3 terminating the dispensing pump and selling licence (DPSL) agreement dated April 20, 1997.
2. The petitioners were running a retail dispensing pump under the name and style "Kamala Auto Stores" at G.T. Road, Nurkona, District Burdwan on the strength of dispensing pump and selling licence dated April 20, 1997 (hereinafter referred to as the said agreement) for sale of petroleum products namely, Motor Spirit, Hi-Speed Diesel etc., produced by the Bharat Petroleum Corporation Ltd.
3. The respondent No. 3 issued a show-cause notice dated August 8, 2005 to the petitioners to show-cause as to why the retail outlet of the petitioners had been found dry of HSD during inspection on August 7, 2005. In reply the petitioners informed the respondent No. 3 on August 13, 2005 that the cause of drying out of HSD on August 7, 2005 was delay in receiving the supply of the product. Thereafter, the respondent No. 3 issued a show-cause notice dated August 23, 2005 to the effect as to why the respondent authority would not take action against the petitioners' dealership for violation of Clause 13a of the said agreement. The above show-cause notice further contended that indent for supplying HSD had been placed by the petitioners on August 8, 2005 and the same was supplied on the same day. On January 30, 2006 the petitioners received another communication from the Assistant Manager, Sales and Engineer, Durgapur of the respondent No. 3 to the effect that during his visit to the retail outlet of the petitioner on January 27, 2006, the above outlet was found dry of Hi-Speed Diesel. Subsequently, the petitioners received a show-cause notice dated February 6, 2006 from the respondent No. 3 to show-cause as to why action should not be taken against the petitioners for violation of Clause Nos. 10(b)(j), 13a(ii)(v)(vii)(viii) of the said agreement dated April 20, 1997 on the basis of facts and circumstances mentioned in the above notice. The petitioner No. 1 as per his communication dated February 14, 2006 informed the respondent authority, of the following ground as the cause of his temporary reduction in placing orders for petroleum products:-
(i) The petitioner No. 1 faced a car accident two months ago.
(ii) Fifteen days ago fire broke out at his residence due to electric short-circuit and valuable goods were destroyed.
4. Thereafter, by the impugned order dated February 24, 2006 the said agreement dated April 20, 1997 was cancelled by the respondent No. 3.
5. At the very out set, a preliminary objection is raised on behalf of the respondents with regard to the maintainability of this writ application.
6. It is submitted on behalf of toe respondents that no public law element is involved in this writ application. The subject matter involved in this writ application relates to only private law element.
7. It is further submitted on behalf of the respondents that in the contractual field the state or its instrumentality acts purely in its executive capacity and the relationship in between the parties are no longer governed by the constitutional provisions but by the legally valid contract which determines the rights and obligations of the parties inter se.
8. It is also submitted that the remedy of Article 226 is unavailable to enforce a qua-contract. Private law may involve a state, a subordinate body or a public body in contractual or tortuous but they cannot be siphoned off in to writ jurisdiction.
9. It is further submitted on behalf of the respondents that in the field of contract the Court must bear in mind that the State or its agent may suffer financial loss. According to the respondents, in any case, if the dispute cannot be resolved without any external aid then an application under Article 226 of the Constitution of India is not maintainable.
10. Relying upon the decision of Kulchhind
