ASHISH GUPTA Vs. IBP CO LTD

JUDGEMENT

(1.) The challenge in this Petition is to the termination of the Dealership, of the Petitioner without affording him an opportunity of showing cause against the intended decision and/or an opportunity of being heard. The Respondents have asserted that since the dispute falls within the realm of private contract the Petition ought not to be maintainable; and further that the existence of an Arbitration Clause leaves no option to the Writ Court but to point to the parties in the direction of arbitration.

(2.) Dr. Singhvi, learned Senior Counsel appearing on behalf of Respondent No.1, has relied on the decision of the Hon'ble Supreme Court in Indian Oil Corporation Ltd. vs. Amritsar Gas Service and Others, (1991) 1 SCC 533. He has laid store on the arguments put forward in that case to the effect that the validity of an Award ought to be decided on the principles of private law and the law of contracts and not on the touchstone of constitutional limitations to which IOCL, as an instrumentality of the State, may be subject since the suit was based on breach of contract alone and the arbitrator also proceeded only on that basis to grant relief. After noting these observations the Bench declined to go into the Constitutional constraints of Article 14, particularly in view of the contemporaneous decisions in Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay, (1989) 3 SCC 293 and Mahabir Auto Stores v. Indian Oil Corporation, (1990) 3 SCC 752. The Apex Court observed that they were dealing with a suit (in contradistinction to a writ) based on a breach of contract and remedies flowing therefrom in the context of which the Arbitrator had given his Award. In my view this decision does not proscribe the exercise of extraordinary writ jurisdiction of the High Courts. The existence of an Arbitration Clause in that precedent does not render it relevant to the questions which have been raised in these proceedings. The Court was principally concerned with the existence or otherwise of an error of fact or law apparent on the face of the Award which situation has not been reached as yet. Reliance is also placed on State of Bihar vs. Jain Plastics and Chemicals Ltd., AIR 2002 SC 206 in which the Court had opined that a writ petition is not the proper proceedings for enforcing contractual obligations; and that if an alternative and equally efficacious remedy is available to a litigant he should be required to pursue that remedy and not invoke the jurisdiction of the High Court. Dr. Singhvi has also referred to Banchhanidhi Rath v. The State of Orissa, AIR 1972 SC 843 and a decision of even earlier vintage, namely, Union Construction Co. (Private Ltd.) v. Chief Engineer, Eastern Command, AIR 1980 Allahabad 72.

(3.) Another decision of the same era is Bareilly Development Authority vs. Ajai Pal Singh, (1989) 2 SCC 116 : AIR 1989 SC 1076 which pronounced that where the State entered into a non-statutory contract, a dispute pertaining to the cost of houses would not be amenable to writ jurisdiction. The court noted that such question could not be labelled as arbitrary and discriminatory, meaning thereby, that if either of these elements were perceived, writ jurisdiction would be available. A larger Bench in Marfatia had opined that a public body even in respect of its dealing with its tenant must act in public interest and an infraction of that duty would be amenable to examination either in a civil suit or in writ jurisdiction. The ratio of Mahabir Auto is that the State or its instrumentality when engaged in commercial transactions must act reasonably, and should inform and take into confidence the adverse party against whom adverse action is contemplated. In Kerala State Electricity Board vs. Kurien E. Kalathil, 2000 (6) SCC 293 the Court repelled an effort to invoke writ powers where the dispute concern the interpretation and implementation of a Clause in a Contract. In order to enjoy comprehensive understanding of this legal conundrum one should not confuse the decision in Radhakrishna Agarwal vs. State of Bihar, (1977) 3 SCC 457 to lay down that contractual dealings between the State and a citizen can never attract jural investigation under Article 226 of the Constitution. The gravamen of the decision is that the dispute whether there is or there is no a breach of contract should be determined by an ordinary civil Court as in every case between the ordinary litigant. The observations in Divisional Forest Officer vs. Bishwanath Tea Co. Ltd., (1981) 3 SCC 238 speak in the same tongue, namely that where a breach of contract is complained of, a party complaining of such breach may sue for specific performance of the contract, if the contract is capable of being specifically performed, or may sue for damages. In allowing the present writ petition I am mindful of these constraints. In holding that the Respondents are fully bound to observe principles of natural justice I am neither directing specific performance of the contract nor adjudicating on damages. It would be useful to recall repeated decisions of the Apex Court to the effect that where statutory provisions have not been complied with, writ proceedings would be maintainable even though the remedy of an Appeal is available. For example, where a rateable value has been determined without notice to the Assessee it could successfully be assailed through writ proceedings. However, if the quantum of rateable value is assailed, it would perforce have to be attacked in an Appeal. To hold any other opinion would set at naught path-breaking decision in Ramana Dayaram Shetty vs. International Airport Authority of India, (1979) 3 SCC 489 : AIR 1979 SC 1678.