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2020 Supreme(Mad) 2034
IN THE HIGH COURT OF JUDICATURE AT MADRAS
A.P. SAHI, SENTHILKUMAR RAMAMOORTHY, JJ.
Indian Oil Corporation Limited, Represented by its General Manager, LPG Boiling Plant, Government Engineering Campus, Salem - Appellant
Versus
Lt. Col. Sasikumar (Retd.), Proprietor, Sasikumar & Another - Respondents
W.A. No. 158 of 2020
Decided on : 07-10-2020
Advocate Appeared:
For the Appellant :T.R. Rajagopalan, Senior Counsel, V. Anantha Natarajan, Advocate.
For the Respondents:P.J. Rishikesh, Advocate.
The main legal point established in the judgment is that disputes over the duration and extension of a contract, as well as the validity of pre-closure, should be resolved through arbitration and not maintainable under Article 226.
Headnote:
Contract - Validity of Pre-closure - Clause-29, Clause-16 of Tender Terms - Indian Arbitration and Conciliation Act, 1996 - Public Law Action - Private Law Dispute - Principles of Natural Justice - Arbitration Clause - Discretionary Remedy under Article 226 - Duration of Contract - Sole Discretion of Corporation - Empanelment Certificate - Age of Proprietor
Fact of the Case:
The appellant, Indian Oil Corporation, filed a writ appeal challenging the judgment allowing the writ petition filed by the first respondent petitioner, which held the pre-closure of a security services contract invalid and directed the appellant to retain the services of the first respondent petitioner for the entire period of the agreement. The appellant contended that the contract duration was for one year, extendable at its discretion, and had expired. The main issue was whether the writ petition was maintainable in a contractual matter and whether the pre-closure was valid.
Finding of the Court:
The court found that the pre-closure order lacked valid reasons and violated principles of natural justice. It held that the dispute over the duration of the contract was an arbitral dispute and not maintainable under Article 226. The court set aside the direction to continue the contract beyond one year and allowed the appeal to that extent.
Issues: The issues involved the validity of the pre-closure of the contract, the maintainability of the writ petition in a contractual matter, and the interpretation of the contract terms regarding the duration and extension of the contract.
Ratio Decidendi: The court held that the pre-closure lacked valid reasons and violated principles of natural justice. It also determined that the dispute over the duration of the contract was an arbitral dispute and not maintainable under Article 226. The court emphasized the importance of the arbitration clause and the discretion of the Corporation in extending the contract.
Final Decision: The court set aside the direction to continue the contract beyond one year and allowed the appeal to that extent. It held that any dispute over the contract's duration or extension should be resolved through arbitration and not under Article 226.
JUDGMENT :
A.P. Sahi, J.
(Prayer: Appeal filed under Clause 15 of the Letters Patent against the order dated 30.12.2019 made in W.P.No.34305 of 2019.)
1. This writ appeal has been filed by the appellant Indian Oil Corporation questioning the impugned judgment dated 30.12.2019, whereby a learned Single Judge, in a matter of contract relating to security services being engaged by the appellant Corporation, has allowed the writ petition filed by the first respondent petitioner holding that the pre-closure of the contract was invalid and contrary to law. The learned Single Judge has, accordingly, directed that the appellant Corporation should adhere to the agreement dated 24.7.2019 and retain the services of the first respondent petitioner for the entire period of the agreement.
2. The appeal was filed earlier, but it took some time for being taken up for admission and on 13.7.2020, we heard learned counsel for the parties and passed the following order:
“Heard learned Senior Counsel for the appellant and learned counsel for the first respondent/petitioner.
2. Primarily, the question that arises for consideration is as to whether in a matter of contract of employment, a writ petition could have been entertained, more so, in the wake of the fact that the very contract of employment also provides for an Arbitration clause. The learned Single Judge has proceeded to allow the writ petition and quashed the termination of the contract on the ground that no reasons have been assigned thereto.
3. Prima facie, we find from the terms of the contract, particularly, clause-29 read with clause-16 of the Terms and conditions of the Tender and the Duration of the Contract as provided in the tender condition that the Corporation has the authority to terminate the contract of service at any time by giving one month notice in writing or without prior notice in this regard. In the present case, the appellant has been given one month's prior notice and wages for termination of contract.
4. The Apex Court in several cases has first drawn the distinction between a public law action and remedy in relation thereto and a dispute involving private law coupled with the remedies in relation thereto. One of such decisions is in the case of Joshi Technologies International Inc. v. Union of India and others, (2015) 7 SCC 728, where in paragraphs (69) to (70.11), the Apex Court has drawn the parameters of making such a remedy available, after having examined one of the leading cases of Shrilekha Vidyarthi v. State of U.P., (1991) 1 SCC 212, where it was held that the engagement of a lawyer by the State Government under the Criminal Procedure Code or Legal Remembrance Manual indicated the existence public element attached to the 'office' or 'post' of District Government Counsel. In the present case, keeping in view the pure contractual engagement of a security personnel through a private security agency, and a tender floated with no statutory control or involvement of a public office or post, it is highly doubtful as to whether a relief under Article 226 of the Constitution of India could be extended.
5. In our opinion, the learned Single Judge has prima facie proceeded on an erroneous assumption of law in order to maintain the writ petition without discussing the law of maintainability.
6. Consequently, until further orders of this Court, we stay the operation of the impugned order dated 30.12.2019.
7. Learned counsel for the first respondent prays for time to file a counter.
8. Three weeks time is granted for filing counter affidavit and two weeks time is granted for filing rejoinder by the appellant.
9. List the matter on 24.08.2020.”
3. At the very outset, as pointed out by Shri T.R.Rajagopalan, learned Senior Counsel for the appellant Corporation, even though the duration of the contract has been shown to be 24 months in the agreement dated 24.7.2019 said to have bee
