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Gujarat High Court
Judgename :B.C.PATEL, C.K.BUCH
GANDHI ROAD LINES - Appellant
Versus
COLLECTOR OF BANASKANTHA - Respondent
L.P.A. 46 of 1988
Decided On : 12/10/1998
On broad principles, it must be noted that application under Art. 226 of the Constitution of India is not maintainable for enforcement or breach of contractual rights against a party to the contract irrespective of the fact whether such a party is a private individual or the State because such dispute involves questions of facts which can be investigated in a suit rather than in the writ proceedings.
[Para 8]
The matter being governed by the law of Contract, matter was left to the discretion of the Collector to decide and when despite several notices if appellant has not cared to discharge his duties, then in our opinion, when the matter is covered by the Contract Act, and even according to the appellant breach is commited by the party, interpreting the terminology of the contract is to be established, remedy for the appellant would not be a petition under Art. 226 of the Constitution.
[Para 20]
(b) Contract - Breach of - Party to the agreement cannot decide the same and Govt. being party in the case Collector can not hold to decide that appellant committed the breach and therefore, liable for damages - On facts the contention is not sustainable - Agreement indicates that nominee the Sangh as well as appellant were parties to the agreement and as per agreement they had left the matter at the discretion of the Collector in case of dispute or breach - As such there is no force in the submission that Collector was a party to the agreement.
In view of the policy of the State Government, when quota is fixed, it becomes the duty of the State to see that proper agency is appointed for the purpose of distribution and with that purpose, if advertisement is given, it cannot be said that the appellant has entered into an agreement with the State more particularly when in the agreement, there is nothing to show that the Collector was a party to the agreement. On the contrary, agreement indicates that nominee as well as the appellant left the matter at the discretion of the Collector in case the breach is committed or in case there is a dispute regarding distance and charges and, therefore, we do not find any merits in the submission that the Collector was a party to the agreement.
[Para 10]
(c) Principles of natural justice - Scope and applicability - Facts indicate that after notice dated 16.11.1984 there is further correspondence & notice to appellant dated 24.1.1986 in the matter - That apart no malafides are alleged against the Collector and there is nothing to show that order of forfeiture of deposit made by Collector in any way bad or illegal.
It is further submitted that the order Annexure:C is required to be quashed and set aside on the ground that the said order is passed in viloation of the principles of natural justice. We have indicated earlier that after notice dated 16.11.1984, there is further correspondence and notice given to the appellant and that is very clear from the order dated 24.1.1986.
[Para 13]
In the instant case, we pointed out earlier that the Collector was not a party to the agreement. Sangh who has been referred to as Nominee in the agreement and the appellant, have entered into an agreement and both of them authorised the Collector to decide as to what amount should be forfeited. No malafides are alleged against the Collector. The collector is a public servant and if the matter which is left to him; has been decided independently, it cannot be said that his decision is bad or illegal. It appears that he has taken into consideration not only the amount which was required to be paid for carting, but he has also taken into consideration the quota of sugar which lapsed on account of inaction of the appellant. Details of lapsed quota forms the part of the order.
[Para 14]
(d) Damages - Extent of - Breach of contract - In every case of breach of contract the person aggrieved is not required to prove the actual loss or damage suffered - In the instant case to see proper distribution of levy sugar, the amount was got deposited with a right to forfeit in case of breach of contract - Collector in passing impugned order of forfeiture has taken into consideration the quota which has lapsed - Considering this aspect Court refused to interfere.
In the alternative Mr. Shah submitted that extent of damage should not exceed the loss suffered, that is to say, amount paid in excess for carting sugar. In his submission, only that much amount should have been forfeited by the Collector and not the entire amount. As we said earlier, the Collector has taken into consideration the quota which has lapsed and that is apparent as the same is the part of the order.
[Para 15]
It is required to be noted that in every case of breach of contract, the person aggrieved by the breach is not required to prove the actual loss or damage suffered by him before he can claim the amount and the Court is competent to award reasonable compensation in a case of breach even if no actual damage is proved to have been suffered in consequence of breach of contract. In cases of breach of some contract, it may be impossible for the Court to assess compensation arising from the breach, while in other cases compensation can be calculated in accordance with established rules. Where the Court is unable to assess the compensation the sum named by the parties if it be regarded as a genuine pre-estimate may be taken into consideration as the measure of reasonable compensation, but not if the sum named is in the nature of a penalty. In the instant case, the Nominee who is not a party before the Court entered into an agreement with the appellant. The sum of Rs. 1 lakh was deposited for due performance of the contract. It is not only towards carting charges or the loss which might be suffered, this amount was deposited. It appears that with a view to see that there is proper distribution and that too of levy sugar, the amount was got deposited with a right to forfeit in case of breach of contract. Considering this aspect, we would not like to interfere with the order passed by learned Single Judge.
[Para 17]
( 1 ) A partnership firm carrying on business of transport filed a writ petition in this court challenging the order of forfeiting the deposit by an order dated 24. 1. 1986 passed by the Collector. Learned Single Judge considering the submissions made by learned counsel appearing for the petitioner, dismissed the same vide order dated 7. 9. 1987. Hence present appeal.
( 2 ) THE appellant and the Banaskantha Jill Sahakari Kharid Vechan Sangh ( hereinafter referred to as the Sangh ) entered into an agreement on 5. 6. 1984 at Palanpur. The State Government was allocating quota of sugar and sugar products for proper distribution thereof in the districts of the State. From the preamble of the contract, it appears that transporter-appellant was entitled to get transport charges of sugar per kilometer per ton. Six slabs are stated in the preamble for different charges according to the distance. As per the conditions, the appellant was required to lift sugar from the factory situated within the State of Gujarat or from any other place or from the godown and was required to supply at various shops and/or godowns of Nominee. The appellant was also required to see that the quota of sugar allocated is not lapsed. Condition No. 2 of contract provided for a dispute with regard to the charges to be paid considering the distance and that the decision of the Collector shall be final. Condition No. 6 of the contract fastened the appellant with liability if damages are suffered by the nominee. The appellant if not transporting the sugar as agreed, the nominee was required to purchase sugar from open market and was required to get it transported, and the appellant was liable to pay the entire amount with costs. Condition No. 13 provided for forfeiture of the amount deposited either in part or in full by the Collector.
( 3 ) APPELLANT annexed Annexure:b along with the petition, inter alia, pointing out that a notice was issued calling upon the appellant to show cause as to why the amount should not be recovered from him and why it should not be adjusted from the deposit, on the ground that as per condition no. 1, though the appellant was required to lift sugar from the factory situated within the State of Gujarat or out side the State of Gujarat or from any godown,in November 1984, the appellant refused to transport levy sugar from the godown situated at Kandla. It appears that appellant stated that the market rate being 0. 36 ps. per kilometer per ton, he would lift only if that rate is offered. In September 1984 also, as he failed to lift and transport sugar, by paying higher charges, the same was transported. In the notice, it was also pointed out that the appellant entered into similar contracts for transporting the sugar to other districts at the same time and he was transporting from Kandla.
( 4 ) THE appellant has thereafter annexed Annexure:c -order dated 24. 1. 1986 wherein in the concluding portion of the order, the Collector, as per condition No. 13 of the contract, forfeited the amount of Rs. 1 lakh. Pointing out to the court notice Annex. B to the effect that the charges only were to be recovered from him, it was submitted that it was not proper for the Collector to forfeit the entire amount of Rs. 1 lakh and, therefore, the order is bad.
( 5 ) PRIMA facie, submission made by learned counsel appearing for the appellant is very attractive. But, suffice it to say that in the order, there is a reference to other correspondence and that correspondence not being placed before the Court by the appellant, it can be said that it is nothing but suppression of material fact. In the order, there is a reference to other breaches committed by the appellant which is clear from the annexure to the order at page 24 of the petition. It is pointed out that on account of inaction of the appellant, in all 1511 tons of sugar quota had lapsed.
( 6 ) LEARNED counsel Mr. Shah submitted that so far as the transactions with regard to Kankrej and
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