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High Court Of Delhi
MOHAN MEAKIN BREWERIES LIMITED - Appellant
Versus
UNION OF INDIA - Respondent
Civil Writ 1336 of 1973
Decided On : 05/09/1975
CONTRACT - RECOVERY OF SUM DUE - ADJUSTMENT OF SECURITY DEPOSIT - RIGHT OF PURCHASER - INTERPRETATION OF CLAUSE 18 OF GENERAL CONDITIONS OF CONTRACT FORM NO. D. G. S. AND D. 68 - WRIT PETITION UNDER ARTICLE 226 OF THE CONSTITUTION - MAINTAINABILITY - JURISDICTION OF HIGH COURT.
Fact of the Case:
The petitioner, a company, entered into a contract with the Government of India for the supply of Rum. The petitioner failed to supply the Rum and the Government cancelled the contract and forfeited the security deposit of Rs. 54,900. The Government also claimed a sum of Rs. 2,57,337 as damages for breach of contract and adjusted the security deposit towards the said claim. The petitioner filed a Writ Petition under Article 226 of the Constitution challenging the action of the Government.
Finding of the Court:
The High Court held that the Government had no right under clause 18 of the General Conditions of Contract Form No. D. G. S. and D. 68 to adjust or recover the amount of Rs. 2,57,337 claimed by it for breach of contract from out of the security amount or the other pending or future bills of the petitioner company. The Court further held that the Writ Petition was not maintainable under Article 226 of the Constitution as the petitioner had an equally efficacious remedy by way of arbitration under clause 24 of the contract.
Issues: 1. Whether the Government had the right to adjust or recover the amount of Rs. 2,57,337 claimed by it for breach of contract from out of the security amount or the other pending or future bills of the petitioner company? 2. Whether the Writ Petition was maintainable under Article 226 of the Constitution?
Ratio Decidendi: 1. Clause 18 of the General Conditions of Contract Form No. D. G. S. and D. 68 applies only where the purchaser has a claim against the contractor for a sum presently due and payable by the contractor. A mere claim by the purchaser for damages for breach of contract is not a claim for a sum presently due and payable. 2. A Writ Petition under Article 226 of the Constitution is not maintainable to enforce a civil liability arising out of a breach of contract or tort to pay an amount of money due to the claimant. The petitioner had an equally efficacious remedy by way of arbitration under clause 24 of the contract.
Final Decision: The Writ Petition was allowed partly. The portion of the letter in which the respondents purported to adjust or deduct the security amount of Rs. 54,900.00 and intimated the petitioner that the balance of Rs. 2,02,437.00 would be recovered from the pending bills, and also directed the Chief Pay and Accounts Officer to recover the aforesaid amount from the pending bills of the petitioner company in its other contracts was quashed. The respondents were directed not to adjust or recover in any manner their claim of Rs. 2,57,337.00 from out of the security amount and pending or future bills of the petitioner company in its other contracts until the said claim of the respondents has been adjudicated in an appropriate forum in accordance with law.
( 1 ) THIS Civil Writ Petition has come up before this Full Bench on a reference by a Division Bench consisting of V. S. Deshpande and S. Rangarajan JJ. , as the learned Judges, in the course of the hearing of the Writ Petition by them. considered that the decisions of two Division Benches of this Court in M]s. Air Foam llulnsn tes {p) Ltd. New Delhi and another v. Uniun of linlia and olhers, 1974 Dal. 1 120, and in Marwar Tent Factory. Union of India. 1974 Rajdhani Law Reporter 218, require to be reexamined and explained by a larger Bench. Although it was not so staled expressly in the order of the Division Bench, the counsel for both the parties are agreed that the entire Writ Petition has been referred to this Full Bench for final disposal.
( 2 ) IN order to appreciate the questions which arise for determination the facts which have given rise to this Writ Petition have to be stated. The petitioner. Messrs Mohan Mealdn Breweries Limited, Mohan Nagar, Ghaziabad (U. P), is a company registered under the Indian Companies Act. There arc three respondents to the Writ Petition. The first respondent is the Union of India through the Secretary. Ministry of Food and Agriculture, Government of India. The second respondent is the Chief Director of Purchase, Army Purchase Organisation, Ministry of Food and Agriculture. Government of India. The third respondent is the Chief Pay and Account Officer. Ministry of Food and Agriculture, Government of India.
( 3 ) THE petitioner-company, by a lelter (Annexure 1) dated December 1. 1971, oflered to supply 6,00,000 litres of Rum to the Government of India for Defence Services at the rate of Rs L83 per litre. The second respondent wrote a letter (Annexure U ). dated December 4, 1971, appreciating the said offer, and again wrote another letter (Annexure III), dated December 7, 1971, asking the petitioner company to mention its delivery schedule for 6,00,000 litres of Rum. The petitioner company sent a reply (Annexure IV), dated December 15, J971. and by another letter (Annexure Vll), dated January 3, 1972. the petitioner company requested the second respondent to write to the Excise Commissioner. Allahabad, for allocation of molasses to the petitioner company so that the requirement of Rum may be met. Accordingly, the second respondent wrote a lettet (Anenexure VI ). dated January 20, 1972. to the Excise Commissioner, Allahabad (U. P. ). On January 30. 1972, the second respondent sent a telegram (Annexure VIII) to the petitioner company stating that its offer to supply six lakh litres of Rum had been accepted, and asking the petitioner company to furnish security deposit of Rs. 54,900. 00 in favour of the Assistant Chief Director of Purchase. The petitioner companv accordinglv ^ave a bank guarantee of Rs. 54. 900. 00 (vide its letter. Annexure IX. dated February 15, 1972 ). The second respondent then, by a letter (Annexure X ). dated December 1, 1972, sent the terms and conditions of the contract for the aforesaid supply of Rum lor Defence Services.
THEREAFTER, the petitioner company informed the respondents Iroi-n time to lime that it would be impossible for it to supply 6,00,000 litres of Rum unless molasses required to manufacture the same were allotted to [lie petitioner company (vide Annexurcs XI to XIX. dated March 29. 1972, March 30, 1972. April II, 1972, May 4, 1972. June 12. 1972. June 23, 1972, and June 24, 1972 ).
ON July 20, 1972, the petitioner company received a letter (Annexure XXI) from the respondents slating that it had failed to supply the six Lakh litres of Rum and cancelling the acceptance of tender at the petitioner s risk and cost and subject to recovery of extra amount, that may be incurred by the Government in purchase of the cancelled quantity. The petitioner company sent a reply (Annexure XXII), dated July 26, 1972, pointing out that the action of the respondent was not justified, and that the petitioner company was willing to make the supply even thou
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