1 IN THE HIGH COURT OF JHARKHAND AT RANCHI L. P. A. No. 600 of 2017
[ENTITY] through its State Project Director , Ranchi Appellant/Respondent Versus
1. M/s. [ENTITY] Proprietor Apex Products Private Limited, Ranchi Contesting Respondent/Writ Petitioner
2. [ENTITY]
3. [ENTITY] through Principal Secretary, Ministry of Human Resources Development, Govt. of India, New Delhi
[ENTITY] Performa Respondents/Respondents With L. P. A. No. 03 of 2019 The [ENTITY] through Principal Secretary, HRD cum [ENTITY] Appellant/Respondent no. 1 Versus
1. M/s. [ENTITY] Respondent No. 1/Writ Petitioner
2. Principal Secretary, Human Resources Department (HRD), [ENTITY] (UOI), New Delhi Respondent No. 2/Respondent no. 4
3. [ENTITY] Respondent No. 3/Respondent no. 2.
4. [ENTITY] Respondent No.4/Respondent No.3
Coram: Hon'ble the Chief Justice Hon'ble Mr. Justice [ENTITY] For the Appellant -[ACT] : Mr. [ENTITY], Adv For the Respondent No. 1-
M/s. [ENTITY] Proprietor) : Mr. [ENTITY], Sr. Adv.
Mr. [ENTITY], Sr. Adv.
Mr.[ENTITY],Adv.
For Respondent [ENTITY] : Mr. [ENTITY], Adv.
For the Appellant-[ENTITY] : Mr. [ENTITY], S.C For the Respondent no. 1
Ms. [ENTITY] Proprietor : Mr. [ENTITY], Sr. Adv.
Mr. [ENTITY], Sr. Adv.
Mr.[ENTITY],Adv.
For Respondent [ENTITY]: Mr. [ENTITY], Adv. For the Respondent no.3-[ACT] : Mr. [ENTITY], Adv.
Reserved on: 28.02.2019 Pronounced on: 23/04/2019
[ENTITY], J: Being aggrieved with the judgment dated 19th September, 2017 rendered by learned Single Judge in [CASE NUMBER], Respondent-[ENTITY] and the Government of Jharkhand are in appeal before us. By the impugned judgment, learned Single Judge has directed the respondent nos. 1, 2 and 3 appellants herein to arrange payment of the admitted outstanding dues of Rs. 11,61,70,081/- with interest at the rate of 6% from the date it became due, within three months from the date of receipt or production of the order.
2. Writ petitioner had approached the First Court for quashing of the order dated 5th June, 2014, by which the respondents refused to release their outstanding dues in terms of the agreement dated 25th September, 2012 towards printing and supply of text books for Class-VIII for academic session 2013-14. Learned Court held that the writ petitioner was entitled to invoke the jurisdiction of the Court under [SECTION] of the [ACT] for enforcement of contractual obligation. As such, it held as under: -
"53. As stated above it is evident from the work order and agreement dated 25.09.2012(Annexure-21) that there is no clause or stipulation that the consideration amount of the contract would be paid subject to condition or approval for release of the fund by the Central Government. The contract has to be interpreted in terms of the words and expression used therein. To reiterate, it is emphasized that agreement was a lawful agreement and the respondents were bound to fulfill the terms and conditions of the agreement/contract.
54. In this context it would be relevant to refer to the observation of Supreme Court in the case of [PRECEDENT] wherein in placitum 'b' of para 3 it has been observed " even in an area of contractual relation, the State and its instrumentality enjoined with the obligation to act with fairness and in doing so they can take into consideration only relevant materials. They must not take any irrelevant consideration while arriving at a decision. The arbitrariness should not appear in their action or decision "
It is evident that the order dated 05.06.2014 is in contravention of [SECTION] of the [ACT] which includes not only what right is infringed but it also extends to the arbitrariness and unreasonable of an action or act done by the authority, i.e., the State.
55. In terms of the agreement contractual and constitutional obligation is cast on the respondents to abide by the terms of agreement. In this connection the decision in the case of M/s. Setu Printers(Supra) as relied on by the petitioner is applicable. In the said decision reference and reliance has been placed on the observation of the Supreme Court in the case of [PRECEDENT] is as follows " that in an appropriate case writ petition arising out of contractual obligation is maintainable and merely because some disputed facts arise the same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule. That the writ petition involving consequential relief of monetary claim is also maintainable and there is no dispute with respect to the above principle."
56. From the facts delineated hereinabove, it is not disputed that the agreement(Annexure-21) was entered into between the petitioner and the respondent no.2. The contract value was Rs.16,62,79,595/- and he was paid an advance of Rs.4,88,86,200/-. It is evidenced from the facts elucidated in the foregoing paragraphs that due to financial impropriety committed by the State officials, the Central Government had directed the State Government to enquire into the matter, then fix the responsibility on the guilty person. The violation of the rule or procedure was with respect to the tender process committed by the officials. The allegations were not with respect to the contract for printing and supply of the text books by the petitioner rather it was against the stockiest and manufacturer of paper.
57. The petitioner has supplied the books in terms of the agreement and despite repeated representations the respondents have denied payment by taking refuge of letter dated 18.10.2013 of MHED, GOI. The dispute with respect to release of fund for the financial impropriety is between the respondent/State and the Central Government. In such circumstance, the petitioner cannot be denied the payment of Rs.11,61,70,081/- on account of fault of the officials of respondent/State as this would amount to penalising the petitioner for no fault of his, especially when he has completed the work order in terms of the agreement and supplied the text books under the lawful agreement.
58. The argument of the learned counsel for the respondents that the facts are in dispute is not acceptable particularly when they have not controverted that the outstanding amount in terms of the contract is to be paid to the petitioner. The excuse that they cannot pay due to the freezing of the [ACT] funds/[ACT] Account is patently fallacious because the MHRD, GOI has not found any fault or lacuna with respect to the validity of the agreement. MHRD has advised the respondents to arrange for payment of the amount to the printers from State's own resources and not from the [ACT] fund.
59. In view of the undisputed facts the contention of the respondent/State that the petitioner cannot invoke the jurisdiction of the Court under [SECTION] for enforcement of contractual obligation is misconceived and not tenable, consequently the letter dated 05.06.2014(Annexure-14) containing the conditional payment is quashed and respondent nos.1,2 and 3 are directed to arrange payment of the admitted outstanding dues of Rs.11,61,70,081/- with interest at the rate of 6% from the date it became due, within three months from the date of receipt/production of this order.
60. In the result, the writ petition stands allowed."
3. Before us appellant-[ENTITY] (for short 'J.E.P.C') has urged the following grounds:
[ACT] is an implementing agency of "Sarva Siksha Abhiyan"
Scheme ( for short 'S.S.A.') jointly run by the Government of India and the [ENTITY], with their proportionate share of funding in the ratio of 60:40 in the Financial Year 2013-2014. Since the Government of India, MHRD received complain relating to the very tender process, allotment of work and supply of books as suffering from financial impropriety, it directed the [ACT] not to make payments from the [ACT] funds by letter dated 18th October 2013. Since [ACT] was prohibited from making payment, the writ petitioner had approached the learned First Court in [CASE NUMBER]. This writ petition was disposed of by order dated 31st October, 2014 directing the [ACT] to decide upon the representation of the writ petitioner by passing a reasoned order. In consequence of the direction of the Writ Court, the impugned order dated 5th June, 2014 was passed by [ACT] holding that payment cannot be made to the contractor till the prohibition was lifted and corresponding funds were released. In the present writ petition, the writ petitioner has not challenged the order dated 18 th October, 2013 of Government of India but has assailed only the consequential order dated 5th June, 2014. Relying upon the ratio in the case of [PRECEDENT], para-22, it has been urged that the writ petition was not maintainable on that score. During course of argument, it has been pointed out by the appellant that the writ court by an interim order dated 11th February, 2015 had allowed liberty to the petitioner to file an appropriate application seeking amendment in the writ petition, after the copy of order dated 18th October, 2013 was made available to it, which the writ petitioner did not choose to challenge. As such, the writ petitioner had no locus to question the consequential order passed by [ACT] repudiating the money claim.
4. Relying upon Clause 24 of the agreement which provides for settlement of dispute and [SECTION] of the Special Condition of Contract contained in the tender document, it has been strongly urged that the writ petition is not maintainable on account of the availability of an alternative dispute resolution mechanism in the nature of arbitration. It has been further urged by the appellant that [ACT] is merely an agent as per [SECTION] of the [ACT] of both the principal employer i.e., Government of India and [ENTITY], which are essential parties to the dispute. Since the agreement provides for arbitration of disputes and [ACT] is only an agent of the principal employer, the writ petition is not maintainable as per mandate of the Apex Court rendered in the case of Joshi Technologies International Inc. Vs. [ENTITY] reported in (2015) 7 SCC 728, Paras- 69.2, 69.4 and 70.4. The case of [PRECEDENT], paragraphs 14, 18, 19, 22 and 24, whereof has been relied in support on this proposition. Appellants have also placed reliance on a judgment of learned Division Bench of this Court dated 9th October, 2018 in [CASE NUMBER] [[PRECEDENT], paragraphs, 2, 6 and 8. It has been finally urged that the instant case involves adjudication on various questions of fact which are in dispute, therefore resort to writ jurisdiction is not the proper remedy. Learned counsel for the appellant has submitted that in [CASE NUMBER], learned Writ Court had granted liberty to arrange the funds from the Government of India and did not award any interest on such a claim which also related to printing and supply of text books. The claim of the writ petitioner on interest also raises a serious question of dispute which cannot be adjudicated in a writ proceeding or the Letters Patent Appeal. Therefore, the impugned order is fit to be quashed.
5. Appellant-[ENTITY] has taken a plea that [ACT] is a Centrally Sponsored Scheme with a share of funds in the ratio of 60:40 between the Central Government and the State Government. However, the learned writ court without appreciating this aspect of the matter has directed the respondent nos. 1, 2 and 3 to arrange the payment of admitted outstanding dues despite prohibition by the Government of India to do so by its letter dated 18th October, 2013 which is not under challenge. In this regard, letter dated 18th October, 2013 has been placed before the Court. Learned Writ Court has made no adjudication regarding the liability for payment between the Government of India and State Government, though the claim arises out of contractual obligation and contains arbitration clause. The State Government is not at fault in not releasing the entire claim of the writ petitioner as under the scheme and the contract it is supposed to pay 40% of the dues funds from the state shares accumulated in the [ACT], whereas the Ministry of Human Resources, Government of India had clearly advised the Government of Jharkhand not to make any expenditure for such procured text book from the funds of [ACT] in its letter dated 18th October, 2013. It is the plea of the State Government that the writ petition is not maintainable in such circumstances and no direction to pay the entire dues could have been issued upon the State Government and [ACT].
6. On the part of the writ petitioner, learned Senior Counsel, Mr. [ENTITY] has made the following submissions:
The tender for printing and supply of NCRT Text Books of Class I to VIII for Academic Sessions 2013-14 issued by the [ACT] as a licensee of NCRT is in furtherance to the constitutional mandate under [SECTION] of the [ACT] and The [ACT]. Annexure-1 to the writ petition containing the tender document dated 25th August, 2012 is referred to in support. This petitioner was a successful tenderer who was awarded work order of value of Rs. 16,62,79,595/- vide Annexure-6 dated 25th September, 2012. Upon award of some packages of the work vide letter dated 24th September, 2012 (Annexure-5 to the writ petition), advance payment of Rs. 4,88,86,200/- were released by the council in favour of the writ petitioner. The agreement entered between the writ petition and [ACT] dated 25th September, 2012 stipulated that payments were to be made by the council alone. It did not mention that the liability for payment was conditional upon receipt of money from the Central Government. Writ petitioner duly supplied the text books except some insignificant delay at one place and requested for payment as per contract. Thereafter, it approached the Writ Court in [CASE NUMBER] since no payments were forthcoming. Pursuant to the direction of the Writ Court dated 31st March, 2014 the council passed a reasoned order dated 5th June, 2014 (Annexure-14 impugned in the instant writ petition), whereunder it admitted that an amount of Rs. 11,61,70,081/- is due and admissible but because of the Central Government letter dated 18th October, 2013 restraining the payments to be made from [ACT] funds, payments could not be made to the petitioner. Therefore, petitioner laid challenge to the same in the instant writ petition and sought direction upon the council and State to make payments. Reference has also been made to the report of Three Men High Power Committee which enquired into the matter. As per the writ petitioner, the committee advised the State Government for release of fund for paying the printers. This report is Annexure-5 to the L.P.A dated 4th June, 2015. Learned Senior Counsel for the writ petitioner/respondent has also adverted to the letter dated 18th October, 2013 and submitted that the Central Government only directed that State must not utilize [ACT] fund for procuring the text book but there was no direction not to pay at all to the printers. The Central Government in its letter dated 13th June, 2016 (Annexure-4 to L.P.A) has clarified that there was no privity of contract between the Central Government and the printers. It was open for the State to pay from its own funds since the State has utilized the supplies made by the writ petitioners and it is the primary beneficiaries of the book so supplied. The contract was between the council and the printers, therefore, it is the liability of the State and the council to make the payment. Therefore, learned writ court upheld the plea raised by the writ petitioner and directed the Respondent-State and [ACT] to make the admissible payments with interest.
7. Letter of Chief Secretary, Jharkhand to Government of India dated 13th August, 2018 (Annexure-E to the counter affidavit of the writ petitioner/respondent in L.P.A) also has been referred to. It indicates that Three Men Committee has not found any anomaly. It has also been indicated that non-payment of admitted dues to the printers has resulted in futile litigation whereunder liability is increasing day by day due to rising interest burden. Therefore, request for sanction has been made. It has been brought to the Court's notice that the entire money has been deposited along with interest in the Court by the State Government in pursuance of the contempt matter before learned Single Judge. Writ petitioner has urged that [ACT] is a State under [SECTION] of the [ACT] and has to act under the mandate of [SECTION] of the [ACT] read with provisions of [ACT]. Thus, the claim of the writ petitioner does not lie in private law domain. The Central Government has not prohibited the State Government or [ACT] to pay the admissible dues of the printers through its letter dated 18th October, 2013 and the subsequent letter dated 13th June, 2016.
8. The plea on the availability of arbitration clause has been repelled by the writ petitioner stating that the Central Government is not a party to the agreement, therefore, there cannot be arbitration involving Central Government. Moreover, there is no dispute between the petitioner and the Central Government. Further since the liability has been admitted by [ACT], there is no need to resort for arbitration as there is no dispute in existence. In this regard reliance is placed on the case of [PRECEDENT]. Learned senior counsel for the appellant has relied upon a judgment of the Bombay High Court rendered in the case of [PRECEDENT] also in the case of [PRECEDENT] and submitted that the State Government or the [ACT] cannot suffer the writ petitioner for their own fault.
9. He has further submitted that the terms of the agreement between the [ACT] and the writ petitioner cannot be novated to make the payment conditional on release of funds by the Central Government. In support of the aforesaid submissions, reference is made to the case of [PRECEDENT] Another limb of argument of the writ petitioner is that the State is required to act in just and fair manner without resorting to technicalities and not deny what is due and admissible to the writ petitioner. Learned Senior Counsel for the appellant submits that the State cannot act as a Jekyll and Hyde personality even in the contractual field as held by the Apex Court in [PRECEDENT]. The writ petition is therefore wholly maintainable. It is submitted that the learned Writ court has after due consideration of the case of the parties rightly upheld the plea raised by the writ petitioner under [SECTION] of the [ACT] and directed the admissible payments to be made along with interest. The judgment of the Apex Court rendered in the case of [PRECEDENT] has been referred to in support. According to the writ petitioner, since the amount is not in dispute, rather admitted, writ petitioner is entitled to receive the entire admissible dues as ordered by the writ court along with interest. The writ petitioner is suffering huge loss of capital and is facing liability to pay recurring interest to the Bank so long the payments are not released. The dispute between the State Government/[ACT] and the Central Government should not come in the way of the release of the admissible dues to the writ petitioner. Reference is made to the case of [PRECEDENT]. On behalf of the writ petitioner reliance has also been placed on the case of [PRECEDENT], paragraphs 19, 21 and 22 on the proposition that when the writ petitioner did not commit any breach or irregularities in the supply, [ACT] was bound to release the payment as per the terms of the agreement. It cannot withhold payment on the plea that funds have not been allocated by its principal employer.
10. On behalf of [ENTITY], Ministry of Human Resource Development (MHRD) it is submitted that the decision of the [ENTITY] contained in letter dated 18th October 2013 was taken after examining the inquiry report of the State Government. It was found that there was clear violation of [ACT] in the procurement of text books for the year 2013-14 leading to serious financial impropriety. The Government of Jharkhand was advised that no expenditure for such procured text books should be incurred from the funds of centrally sponsored scheme of [ACT]. Writ petitioner had made a prayer for calling this letter dated 18.10.2013 and challenge it, but it was not challenged by the writ petitioner even after it was brought on record. Therefore, it is precluded from assailing it in the instant LPA. [ENTITY] has taken a plea that there was no privity of contract between the writ petitioner and the [ENTITY] since agreement was entered into with the [ACT]. Therefore, the liability is of the [ENTITY] and [ACT] to make payment to the petitioner in accordance with the State Government's own procedure for procurement of supplying text book. MHRD, GOI has not put any restriction/ban on payment for printing of text books from State's own resources. MHRD, Government of India has vide letter dated 27 th March 2015 and through letter dated 13th June 2016 clarified its stand as earlier indicated through letter dated 2nd July 2014. The State Government was advised not to incur any expenditure for such procured text books from the funds of centrally sponsored scheme.
11. We have heard the learned counsel for the parties at length and given anxious consideration to the rival pleas advanced by them. Relevant material facts germane to the issue in controversy can be briefly stated as follows:
M/s. [ENTITY], Ranchi obtained a work order dated 25th September 2012 for printing and supply of text books for the academic session 2013-14 for Class-VIII for an estimated value of Rs.16,62,79,595/-. An agreement was entered into between the [ACT] and M/s [ENTITY], Ranchi. Supplies were made by the Printer and about 30% of the value of the work was paid in advance to the tune of Rs.4,98,83,878/- upon furnishing of bank guarantee. On the other hand on receipt of a complaint by one Shri [ENTITY] an inquiry was conducted upon direction of the MHRD, GOI by the Government of Jharkhand. That inquiry report is at Annexure-5 to the LPA under the signatures of the Principal Secretary, Planning and Development Department, Government of Jharkhand; the Principal Secretary, Finance Department, Government of Jharkhand and the Development Commissioner, Jharkhand. This report was forwarded to the MHRD, Government of India for examination by letter dated 25 th September 2013. MHRD, Department of School Education and Literacy, Government of India examined the report and vide its letter dated 18 th October 2013 advised the Government of Jharkhand not to undertake expenditure for such procured text books from the funds of centrally sponsored scheme of [ACT]. It also advised to fix the responsibility for the serious financial impropriety and take action against those found guilty in the procurement of the text books. When the payments were not being made to the writ petitioner, he approached the Writ Court in the first round of litigation in [CASE NUMBER]. That writ petition was disposed of by order dated 31st March 2014 directing the respondent nos. 3 and 4 to consider the petitioner's representation and pass a reasoned order within six weeks. It was observed that if any amount is found due and payable, admitted amount should be paid to the petitioner within 4 weeks thereafter. Pursuant thereto the order dated 5th June 2014 bearing memo no.[ACT]/1008 was passed which was the subject matter in writ petition being [CASE NUMBER] from which this appeal arises.
12. Perusal of the order dated 5th June 2014 passed by the State Project Director indicates that an amount of Rs.11,61,70,081/- were found payable to the writ petitioner M/s [ENTITY] after certain deductions. However, [ACT] expressed its inability in making payments since the MHRD, Government of India had vide letter dated 18th October 2013 restrained it from doing so from [ACT] fund. One more noticeable fact necessary to be mentioned herein is that the writ petitioner had also made a prayer to direct the respondents to bring on record the order dated 18 th October 2013 of the MHRD by which it had unilaterally ordered for stoppage of release of payment related to print of text books by the petitioner and also sought quashing of the same and consequent order for release of the admitted dues of the petitioner. However, though such letter was brought on record and the learned Writ Court by an order dated 11 th February 2015 allowed liberty to the petitioner to file appropriate application seeking amendment in the writ petition but the writ petitioner did not chose to challenge it.
13. In this factual background, on consideration of the rival pleadings and submission of the parties, the Writ Court rejected the objection on plea of maintainability of the writ petition for enforcement of contractual obligation and quashed the letter dated 5th June 2014. It directed respondent nos. 1, 2 and 3 who were the Secretary, H.R.D. cum State Project Director, [ACT] and officials of the [ACT] to arrange payment of admitted outstanding dues of Rs.11,61,70,081/- with interest @ 6% from the date it became due within three months from the date of receipt of the order. It is pertinent to mention here that the Writ Court at para-39 of the judgment observed that it is not disputed that [ACT] was created and constituted under the Sarv Siksha Abhiyan ([ACT]) scheme of Central Government. Upon examining the composition and hierarchical structure of [ACT], it was of the view that the Council is controlled by the Government financially, functionally and administratively meaning that the Government's control is all pervasive. It also took note at para-40 of the judgment that 'It is admitted that the funds are provided by the Central and State Government'. Further at para-47 it again observed as under:-
"47. Admitted position is that the financial funding is in the ratio of 60:40 by the Central Government and State Government. It is noticed that the object and purpose of the scheme was monitored by the Government officials. It is well settled that the words "any person or authority" used in [SECTION] is not confined to statutory authority and instrumentality of the State rather they govern any person or body which is performing the public duty.
It is noticed that since the respondent did not have the means or time to print and supply the text books required under [ACT] scheme it entered into an agreement with the petitioner to fulfill the obligation for implementation of the scheme of universalisation of elementary education."
14. At para-49 the Writ Court further observed that there was no dispute on the question that there was a lawful agreement/ contract and that the conditions of the contract were complied by the petitioner and there were no allegation of violation of any provision or terms of the contract.
The outstanding dues were neither disputed nor questionable though admittedly not paid to the petitioner. The Writ Court observed that if the officers had not followed the procedure in issuance of the tender, the petitioner cannot be faulted and penalized for the wrongful acts of the officers. The plea of maintainability of the writ petition for enforcement of contractual obligation and existence of an arbitration clause therein were negated after discussion of the judgments cited by the rival parties on the issue, many of which have also been placed before us also.
15. The tender document and extracts of the [ACT] scheme have also been brought on record before this Court. The procurement of the text books and its supply were made under the [ACT] scheme which is a centrally sponsored scheme of the Government of India in which the funding ratio is 60:40 between the Central Government and the State Government. Indeed the agreement was entered into between the [ACT] and M/s [ENTITY]s and neither the State Government nor the Central Government were parties to it. The tender document issued by the State Project Director, [ACT] containing the Special Conditions of contract have also been placed before us. [SECTION] Instruction to Bidders indicates that [ACT] was the licence holder publisher of NCERT text books from Class-II to Class- VIII in the [ENTITY]. [SECTION] of the tender document also contains the provision for settlement of disputes between the [ACT] and the Printer by arbitration on failure to resolve the difference and disputes by mutual consultation. Clause-8 under the Special Conditions provides for payment for text books at graded levels after adequate supplies being made up to the destination. Clause-11 under the Special Condition also deals with the settlement of disputes which reads as under:-
"The dispute resolution mechanism to be applied pursuant to GCC Clause-24 shall be as follows:
(a) In case of dispute or difference arising between the [ACT] and Printer(s) relating to any matter arising out of or connected with this agreement or contract, such disputes or difference shall be sorted out at the level of State Project Director, [ACT] and printer(s). If the dispute persists to remain unsolved then it will be entertained, heard and finalized as per the provision of the [ACT]. The Arbitrator will be the Secretary, Human Resource Development Department and Government of Jharkhand, Ranchi.
(b) The decision of the arbitrator shall be final and binding upon both the parties."
The tender document which is Annexure-11 to the supplementary affidavit dated 11th September 2018 shows that the bids were invited under the 'Sarva Shiksha Abhiyan' and [ACT] was the implementing agency.
16. The bone of contention between the appellants i.e. the [ACT] and the State Government, the writ petitioner and the [ENTITY] is on the question of liability of making the payments. The Writ Court has directed the Principal Secretary, HRD cum State Project Director, [ENTITY]; The State Project Director, [ENTITY] and the Administrative Officer cum Indenting Officer, [ENTITY], respondent nos. 1 to 3 to arrange payment of the admitted outstanding dues with interest @ 6% from the date it became due. The Writ Court has proceeded on the assumption that the procurement of text books and its supplies were utilized by the respondent / State Government under the aforesaid scheme. Learned Writ Court had however accepted that [ACT] was created under the Sarva Shiksha Abhiyan ([ACT]) Scheme of Central Government and the financial funding was in the ratio of 60:40 between the Central Government and the State Government. It needs mention here that the writ petitioner has brought on record a letter of the Chief Secretary, Jharkhand to the Government of India dated 13 th August 2018 (Annexure-E to their counter affidavit). According to the writ petitioner, the Chief Secretary, Jharkhand has taken a stand that the Three Men Committee has not found any anomaly in the procurement of the text books. The MHRD, GOI has been requested to sanction the funds under [ACT] for paying the outstanding liabilities out of procurement of text books. It is considered appropriate to reproduce the text of this letter hereunder:-
"Sub: Payment for printing and supply of textbooks under [ACT] for the year 2013-14.
Ref: MHRD Letter No.15-2/2012-EE.11 Date : 18.04.2016.
Apropos the above mentioned subject, I would like to draw your kind attention towards release of pending payments against printing and supply of text books under [ACT] for the academic year 2013-14. It transpires that due to one anonymous complaint, in spite of books being purchased by the Education Department and distributed in time, the GoI decided not to support the fee distribution of books for the year 2013-14 and instructed not to make payment out of the [ACT] Budget.
Further, taking note of the complaint, the State Government constituted a high level three member committee under the chairmanship of the Development Commissioner, Government of Jharkhand with Principal Secretary, Finance and Principal Secretary, Planning and Development as other two members.
This committee examined the procurement process and no anomaly was found. The rates were also compared with NCERT as well as rates in the neighbouring states. Rates in Jharkhand were found to be on lower side. Since then, the Government of Jharkhand has been repeatedly requesting for release of funds under the suitable head towards the payment of dues for printing and supply of the aforementioned text books.
Non-payment of admitted dues to the printers has resulted in futile litigation where-under liability is increasing day by day due to rising interest burden. It would not be out of place to mention that in a recent order passed by the Commercial Court, Ranchi in execution [CASE NUMBER] of Pioneer Printers, a sum of Rs.17 crore has been decreed against the principal amount of Rs.7 crore. Two similar cases are also under process in the same Commercial Court, Ranchi. In the matter of other three printers, orders for payment along with interest have been passed by Hon'ble High Court, Jharkhand.
The impugned text books, printed & distributed basically catered to the needs of poor and marginalized sections including those from Scheduled Tribe and Scheduled Caste communities. As of now, principal liabilities amount to Rs.69,19,12,955/- (Sixty nine crore nineteen lakh twelve thousand nine hundred fifty five).
You are, therefore, requested to kindly take immediate relook at this issue and sanction sufficient funds, under the relevant head of [ACT], keeping in view the spirit of [ACT] and the interest of school education programmes in the State.
Yours Sincerely Sd/ ([ENTITY]) Ms [ENTITY], IAS Secretary Department of School Education and Literacy Government of India New Delhi-110001 Memo No.837 /CS Dated 13.08.2018."
17. We have taken note earlier that the letter dated 18th October 2013 of MHRD, Department of School Education and Literacy, Government of India whereunder it had advised the Government of Jharkhand that no expenditure of such procured text books should be incurred from the funds of centrally sponsored scheme of [ACT] was not challenged by the writ petitioner though it had made a prayer in the writ petition to call for it and was also granted liberty by an interim order dated 11th February 2015 by the learned Writ Court. Thus, there was no resolution or adjudication on the legality and correctness of the direction of the MHRD as contained in the letter dated 18th October 2013 where it asked the State Government not to make any expenditure for the procured text books from the [ACT] funds for the year 2013-14 on the ground that it involved financial impropriety and mis-management. Central Government and the State Government were at loggerheads on the issue. The Project Director, [ACT] in her order dated 5th June 2014, impugned in the writ petition, had accepted that dues to the tune of Rs.11,61,70,081/- were payable to M/s [ENTITY]s after making certain deduction against printing and supplies made throughout the State. But the question remained to be answered whether respondent nos. 1, 2 and 3 who were the Principal Secretary, HRD cum State Project Director, [ACT] and the officials of [ACT] alone were liable to make the entire payments.
18. Before us it has been repeatedly submitted by the appellants that procurements have been made under the [ACT] scheme but payments from even the State funds under the [ACT] have been restrained by the MHRD, Government of India. On behalf of the writ petitioner it has been argued with vehemence that it is not bound to suffer on account of a dispute between the Central Government and the State Government since agreement was entered into with the [ACT] alone which does not have any dispute about the admissibility of dues. It has been submitted by the writ petitioner that it did not therefore think it proper to lay challenge to the letter dated 18th October 2013 of MHRD, Government of India by which the State Government was restrained from making payments for procurement of text books from the funds of centrally sponsored scheme of [ACT]. This was again clarified by letter dated 13th June 2016 that MHRD has not put any restriction / ban for payment of printing of text books from State's own resources (other than [ACT] Funds and from other than [ACT] Account). As such, the direction of the learned Single Judge upon respondent nos. 1, 2 and 3 to pay the admitted dues with interest was wholly proper and justified in the eyes of law and does not warrant any interference in appeal. It has also been pointed out by the writ petitioner that the entire sum has been deposited with the Registry of this Court in pursuance of the contempt proceedings pursued by the writ petitioner. Writ petitioner has been suffering recurring interest on account of non-release of its dues for no reason.
19. Upon careful consideration of the submissions of the parties, we cannot overlook this vital aspect of the matter that the respective liability of the Central Government or the State Government in order to make payments against the procured text books under [ACT] scheme for the year 2013-14 through the implementing agency [ACT] remained undecided and un- quantified. Whether the Government of India could also be made liable for payments towards such procurement or not? and/or whether the entire liability is to be borne by the respondents Principal Secretary, HRD cum State Project Director and officials of the [ACT] and/or State Government ? We cannot ignore the fact that this procurement was not by the State Government's School Education and Literacy Department but under a centrally sponsored scheme [ACT] which was shared in a ratio of 60:40 between the Central Government and State Government and includes various other components under it.
20. However, we find that the admissibility of the dues stands admitted by the [ACT]. The State Government has also not denied the admissibility of the dues except that it has requested the MHRD, GOI to lift the prohibition for payment from the [ACT] funds. The amount has been deposited as per the impugned direction in the Registry of this Court in pursuance of the contempt proceedings. The writ petitioner claims to be suffering recurring interest over the loans taken by it towards execution of the work. We therefore deem it fit and proper to direct that 40% of the admitted dues which constitutes the State Government's share as per the [ACT] Scheme, under deposit with the Registry, be released in favour of the writ petitioner. However, for payment of the remaining dues, we are of the considered opinion that the question of liability for payment between the Central Government and the State Government, needs to be adjudicated upon by the learned Writ Court. We do not agree with the submission of the writ petitioner that this issue has no connection with the payment of its entire admissible dues since it had entered into an agreement with the [ACT] alone. The fact that the procurement of text books and supplies were made under the centrally sponsored scheme by the [ACT] for the year 2013-14 cannot be brushed aside. We therefore remand the matter on this limited question of adjudging the liability of the State Government and the Central Government to the learned Writ Court. Since the letter dated 18th October 2013 is already on record and the petitioner had also made a prayer for calling it in order to lay challenge to it, we grant it liberty to specifically assail the letter dated 18th October 2013 before the Writ Court. In our view, for determination of question of liability, the legality and correctness of letter dated 18th October 2013 issued by the MHRD, GOI is necessary and moreover it formed the basis for withholding the payments of the admissible dues to the writ petitioner by the State Project Director in the order dated 5th June 2014 impugned in the writ petition.
21. While directing as above, we consider it proper to deal with the rival pleas urged by the parties hereunder. On behalf of the appellant-[ACT], primarily the following grounds have been urged. That the writ petitioner has assailed only the consequential order dated 5th June 2014 passed by [ACT] but not the order dated 18th October 2013 of the MHRD, GOI wherein the Central Government had restrained [ACT] from making payments from the [ACT] fund to the Printer. However, for the reasons discussed above, we have thought it proper to remand the matter to the learned Writ Court on the limited question of adjudging the liability of the State Government and the Central Government. We have granted liberty to the writ petitioner to specifically assail the letter dated 18th October 2013 before the Writ Court since the question of liability between the two Governments is not divorced from the main relief prayed for by the writ petitioner.
22. The order of the learned Single Judge has also been assailed on the ground that the writ petition is not maintainable in the light of an alternative remedy of arbitration available under the agreement with the [ACT] relying upon judgments rendered by the Apex Court in the cases of Joshi Technologies International Inc. (supra), Empire Jute Company Limited (supra) and a Division Bench judgment of this Court rendered in the case of Hindustan Produce Company (supra). Appellant's contention is that the cause of action lies in the private law domain.
In the case of Joshi Technologies International Inc. (supra), the Apex Court has in the concluding paragraph-69 summarised the principles and held that there is no absolute bar to the maintainability of the writ petition even in contractual matters or where there are disputed question of fact or even when monetary claim is raised. Discretion lies with the High Court which under certain circumstances, can refuse to exercise it. While citing the circumstances "normally", the court would not exercise such a discretion, the Hon'ble Supreme Court at para-70.9 has been pleased to observe as under :-
"70.9. The distinction between public law and private law element in the contract with the State is getting blurred. However, it has not been totally obliterated and where the matter falls purely in private field of contract, this Court has maintained the position that writ petition is not maintainable. The dichotomy between public law and private law rights and remedies would depend on the factual matrix of each case and the distinction between the public law remedies and private law field, cannot be demarcated with precision. In fact, each case has to be examined, on its facts whether the contractual relations between the parties bear insignia of public element. Once on the facts of a particular case it is found that nature of the activity or controversy involves public law element, then the matter can be examined by the High Court in writ petitions under [SECTION] of the [ACT] to see whether action of the State and/or instrumentality or agency of the State is fair, just and equitable or that relevant factors are taken into consideration and irrelevant factors have not gone into the decision making process or that the decision is not arbitrary."
23. Viewed in that perspective, the facts and circumstances of the present case denote certain features which persuade us to observe that the claim of the writ petitioner would lie in the public law domain for the following reasons :-
(i) The printing and supply of text books by the writ petitioner under an agreement with [ACT] was in furtherance of the constitutional mandate under [SECTION] whereunder, it is obligatory for the State to provide free and compulsory education to all children of the age of 6 to 14 years in such manner as the State may, by law, determine. The Sarva Shiksha Abhiyan and the frame work for its implementation is based on the [ACT]. [ACT] is scheme of the Central Government, Ministry of Human Resources Development, Department of School Education and Literacy. The framework for implementation of the [ACT] encompasses sharing of the liability for execution of the scheme between the Central Government and the State Government including its funding in a prescribed ratio, which in the instant financial year 2013-14 was in the ratio of 60:40.
[ACT] has been constituted under this framework as a special purpose vehicle for implementation of the scheme. Printing and supply of books to the Government schools up to Class-VIII fell within the realm of State's constitutional and legal obligation. Such duty therefore lies in the public law domain.
(ii) The execution of the agreement between the [ACT] and the writ petitioner of printing and supply of the books has been admitted by the implementing agency [ACT]. The Agreement is not in question. [ACT] has determined that an amount of Rs.11,61,70,081/- were payable to Messrs [ENTITY]s after making certain deductions. As such, admissibility of the dues was also not a matter of dispute involving adjudication on merits on disputed question of facts.
(iii) The conspectus of facts reveal that payments were being withheld by [ACT] due to the ban imposed by MHRD, GOI vide its letter dated 18 th October 2013. This ban was imposed on the basis of an inquiry report of the State Government on the allegation of violation of [ACT] leading to serious financial impropriety. The stand of the State Government, as also reflected from the letter dated 13th August 2018 of the Chief Secretary, Jharkhand, is that no anomaly was found in the procurement process by the Committee. The rates were compared with NCERT as well as rates in the neighbouring states and rates in Jharkhand were found to be on lower side. The State Government has in this light repeatedly requested the MHRD for release of fund under the suitable heads towards payment of dues for printing and supply of the text books as non-payment of the admitted dues has resulted in futile litigation and increasing liability day by day due to rising interest burden.
(iv) The writ petitioner consciously impleaded the MHRD, Government of India as the relief prayed for apparently required adjudication on the rival stand of the MHRD, GOI and the State Government as also the [ACT]. That is why the writ petitioner had also prayed for calling of the order dated 18th October 2013 of the MHRD, GOI and for its quashing and consequential payments.
(v) In the scheme of [ACT], any payments for such supplies through the [ACT] were obviously dependent upon allocation of proportionate share of funds by the Central Government and the State Government though agreement was entered between [ACT] and M/s. [ENTITY], the writ petitioner only.
(vi) The admissibility of the claim having been admitted by the [ACT], in substance, the legal issue required for adjudication was on the liability to pay between the State Government and the Central Government. The learned Writ Court, however, left this issue unanswered. The legality and correctness of the stand of the [ENTITY] requires adjudication as it would only set at rest as to which of the Government or both of them are liable to pay the admissible dues of the writ petitioner.
24. For the aforesaid reasons and also on account of the fact that such an issue requiring adjudication involving the Central Government and the State Government is not covered within the arbitration clause under the agreement between [ACT] and the writ petitioner, the issue at hand could be properly adjudicated by the Writ Court. Having said so, we do not feel it necessary to answer the contentions advanced by the writ petitioner relying upon the case of Indowind Energy Ltd. (supra) that the arbitration agreement is not binding on a party which is not party to the agreement. The liability and correctness of the order dated 18.10.2013 of the MHRD, GOI remaining unanswered, plea of technicality raised by the writ petitioner based upon the ratio of Mangalore Chemicals and Fertilisers Ltd. (supra) and M/s. Hindustan Sugar Mills (supra) is also not tenable on facts of this case. The proposition laid down in the case of Rajasthan State Industrial Development & Investment Corpn. & Anr. (supra) on the construction of terms of a contract is well settled. However, under the scheme of [ACT], as discussed herein above, adjudication on the legal liability of the respective Governments to share the funding for execution of the work allotted to the writ petitioner does not amount to derogation from the express terms and conditions of the agreement entered into between [ACT] and writ petitioner. We are otherwise, in agreement with the contention of the writ petitioner that in the facts and circumstances of the case, the writ petition was maintainable though it involved enforcement of contractual obligation. The writ petitioner has also relied upon the case of Assam Small Scale Industries Development Corpn. Ltd. (supra) to further its submissions that [ACT] cannot withhold payments of the admissible dues on the ground that Central Government has restrained it from doing so from the [ACT] funds. In the case of Assam Small Scale Industries Development Corpn. Ltd. (supra), we find that the terms of the agreement entered between the Corporation and the SSI Units in pursuance of [ACT] and the Scheme framed thereunder required that while 90% of the payments were to be released by the Corporation once the supplies had been completed, only balance 10% of the payments were to be released after full and final payment by the indenting department. The Apex Court observed that if the Corporation had not taken advance in terms of the provision of the Scheme from the purchasing department, it acted on its own peril. Therefore, the Corporation was obliged to make payments of 90% of the Bills when there was no breach or irregularity in supplies.
Whereas, in the facts and circumstances of the present case, we find that there was an express bar imposed by the MHRD, GOI on making any payment from the [ACT] funds towards procurement of the text books by the [ACT]. [ACT], which is an implementing agency of [ACT] scheme of the MHRD, Government of India, was therefore under a legal bar in releasing the [ACT] funds for making the payments to the Printer. In our opinion, in the facts and circumstances of the present cases, this issue which goes to the root of the matter remaining unanswered, requires adjudication by the learned Writ Court to put at rest the entire controversy.
25. An amount of Rs.11,61,70,081/- were found payable to M/s [ENTITY]s-the writ petitioner by the [ACT] after making certain deductions. Admissibility of the dues payable to the writ petitioner not being a matter of dispute, the writ petitioner has been made to suffer due to its non-payment. The award of interest @ 6% over the outstanding amount from the date it became due, cannot be said to be unreasonable or unjust. On account of withholding of the admissible payments, the writ petitioner is losing over the value of the admitted amount which has been rightly compensated by the Writ Court by grant of interest. We do not intend to interfere in the award of interest directed by the Writ Court as no grounds are made out on the part of the appellants. As directed in the foregoing part of the judgment, let the State Government's share of the admitted dues along with interest thereupon, so deposited by the appellant in the Registry, be released by the learned Registrar General in favour of the writ petitioner without any delay.
26. In view of the discussions made and the reasons recorded herein above, the impugned judgment dated 19th September 2017 passed by the Writ Court is interfered in the manner and to the extent indicated herein above. We allow liberty to the parties to make a request for early hearing of the matter before the Writ Court since the issue is pending since 2015. The appeal is partly allowed.
([ENTITY], C.J.) ([ENTITY], J.) Jk/Shamim