IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.20811 of 2010 KUMUD KUMARI WIFE OF ASHOK SETH, (SECRETARY, MAHILA VIKAS KENDRA), PURANI BAZAR, JAMMA MASJID CHOWK BRAHMAN TOLI, MUZAFFARPUR BRANCH OFFICE- MEHTA SADAN MOHANPUR, PUNAICHAK, PATNA-23. …………….PETITIONER. VERSUS 1. THE UNION OF INDIA 2. THE GENERAL MANAGER, EAST CENTRAL RAILWAY HAZIPUR, BIHAR. 3. THE DIVISIONAL RAILWAY MANAGER, EAST CENTRAL RAILWAY SONEPUR, BIHAR. 4. THE ADDITIONAL DIVISIONAL RAIL MANAGER, EAST CENTRAL RAIL, SONEPUR, BIHAR. 5. THE CHIEF MEDICAL SUPERINTENDENT, EAST CENTRAL RAILWAY, SONEPUR. 6. THE SENIOR DIVISIONAL MEDICAL OFFICER (HEALTH) EAST CENTRAL RAILWAY, SONEPUR. 7. SENIOR MEDICAL OFFICER, EAST CENTRAL RAILWAY MUZAFFARPUR………………………………....RESPONDENTS . For the petitioner : Mr. Raghib Ahsan, Sr. Advocate with Mr. Sanjay Kumar Tiwary, Advocate. For the respondents : M/s Naresh Dikshit and Dhirendra Kumar Mishra, Advocates. P R E S E N T HON’BLE MR. JUSTICE S. N. HUSSAIN ----------- O R D E R 13/ 20.05.2011 This writ petition has been filed by the petitioner for directing the respondent concerned to pay the amount of bills since 02.04.2010 to 18.11.2010 during which period the petitioner claims to have done the allotted work as per the agreement and further for a direction to the respondent concerned to allow the petitioner to do the remaining allotted work as per the agreement and if the respondents authorities are not willing to take work from the petitioner then total bill amount regarding work done up till 18.11.2010 along with security amount of Rs.1,83,000.00 be refunded to the petitioner and - 2 - also for quashing letter dated 03.12.2010 issued from the office of Chief Medical Superintendent, East Central Railway, Sonepur informing the petitioner about cancellation of the agreement as well as forfeiture of the security amount and for other ancillary reliefs. 2. The points raised by learned counsel for the petitioner are that the action of the respondents in not paying the amount due to the petitioner against the work already done as per the agreement was not legal and proper and that imposition of additional conditions at the time of making payment contrary to the agreement was also illegal and was merely with a view to cut down the amount in pretext of new mode of grading of work and furthermore the cancellation of the agreement in arbitrary manner only due to protest made by the petitioner against illegal acts of the respondents was a glaring example of colourful exercise of power by respondents authorities. 3. The admitted facts of the case are that for complete sanitation work of Muzaffarpur Railway Station by mechanical as well as manual methods open tender was invited vide Tender Notice No.02/2009 dated 17.11.2009 (Annexure-A), in response of which several offers came, out of whom the offer of the petitioner amounting to Rs.36,41,216.00 for two years (total 730 days) made on 30.12.2009 was the lowest and hence it was accepted by the authorities vide letter dated 18.02.2010 (Annexure-B) and accordingly the petitioner deposited P.G. amount before the respondents on 12.03.2010, whereafter work order was issued by the respondents in her favour vide letter dated 16.03.2010 (Annexure-1) and the petitioner commenced her work from 02.04.2010 (Annexure-C). Finally an agreement was executed on 14.05.2010 (Annexure-2) between the petitioner and the respondents authorities with respect to the said work order, which was sent by the authorities with letter - 3 - dated 03.06.2010. 4. Learned counsel for the petitioner has submitted that she filed applications dated 21.07.2010, 11.08.2010 and 21.08.2010 (Annexure-3 series) to the respondents for payment against the work done as the petitioner had spent huge amount for labourers and machines due to essentiality of the work as per the norms of agreement, but no heed was paid and after hectic persuasion the respondents became ready to make payment against the work already done by the petitioner imposing additional condition that petitioner’s bill will be paid on the basis of established criteria of grading which was neither mentioned in the tender notice nor was included in the agreement and was only meant to compel the petitioner which is apparent form letter of the respondent dated 28.09.2010 (Annexure-4) and in pursuance of that letter the petitioner appeared in the office of Chief Medical Superintendent, Sonepur for finalization of the bill and she raised objection regarding gradation and insisted that she was not liable to be affected by such criteria of grading and thereafter also she filed several representations before the authorities on 30.09.2010, 08.10.2010, 12.10.2010 (Annexure-5). 5. It is further claimed by learned counsel for the petitioner that discarding the claim of the petitioner and her repeated representations, the respondents issued letter dated 20.10.2010 and 25.10.2010 (Annexure-6 series) mentioning therein that on the basis of talk with the petitioner a decision has been taken that payment of bills will be made on the basis of gradation, whereafter the petitioner immediately sent her objection dated 02.11.2010 (Annexure-7) to the respondents and also informed the Health Inspector and Chief Medical Officer of the respondents with respect to the aforesaid facts vide her letter dated 07.11.2010 and 11.11.2010 (Annexure-8 series). Learned - 4 - counsel for the petitioner also averred that thereafter the respondents sent letter dated 15.11.2010 (Annexure-9) stating that since she had accepted the mode of grading and her representative had put his initial on the paper on which gradation was done, the petitioner cannot ignore the same and if she does not act accordingly legal action would be taken. The petitioner replied to the said letter on 28.11.2010 (Annexure-10) stating that the claim of the respondents was neither in accordance with law nor in accordance with Clause No.68 of the Agreement which did not mention any system of grading, but the respondents without considering the grievance of the petitioner issued letter dated 03.12.2010 (Annexure-11) cancelling the agreement and forfeiting the security amount on the ground that the petitioner had not completed the work. 6. Learned counsel for the petitioner argued that the system of grading was neither provided in the agreement dated 14.05.2010 (Annexure-2) nor was mentioned in the work order dated 16.03.2010 (Annexure-1 series) and hence the respondents were not justified in adding such conditions subsequently by letter dated 20.10.2010 (Annexure-6). He also argued that neither any guideline had been provided to ascertain the grading nor any reason had been assigned for the said purpose nor the petitioner had ever agreed for the same and hence the order of cancellation is palpably illegal. He further stressed that so far forfeiture of the security deposit is concerned, there is no express term with respect thereto either in the agreement or even in the letter of the authorities dated 20.10.2010 (Annexure-6), but in spite of that the petitioner had also been fined. He also claimed that no prior notice was ever given to the petitioner in terms of Clause 44 of the agreement and hence the entire action of the respondents is against the terms of agreement and is illegal. - 5 - 7. Learned counsel for the petitioner relied upon two decisions of the Apex Court in case of Mahabir Auto Stores and Others vs. Indian Oil Corporation and others, reported in A.I.R. 1990 SC 1031 and in case of Kumari Shrilekha Vidyarthi and others vs. State of U.P. and others, reported in A.I.R. 1991 SC 537 in which it was held that in cases where the instrumentality of the State enters the contractual field, it should be governed by the incidence of the contract, but in the field of this nature fairness must be there to the parties concerned and having regard to the large number or the long period and the nature of the dealings between the parties, the contractor should have been taken into confidence. It was also held that the State action in contractual matters after contract has been made cannot be excluded form the purview of judicial review to test its validity on the anvil of Article 14 of the Constitution. 8. So far the question of maintainability of the writ petition is concerned, petitioner’s counsel relied upon a decision of the Apex Court in case of Popcorn Entertainment and another vs. City Industrial Development Corpn. and another, reported in (2007) 9 Supreme Court Cases 593 in which it had been held that a writ petition would be maintainable even in a contractual matter in three circumstances, namely (i) if the action of the respondent is illegal and without jurisdiction; (ii) if the principles of natural justice have been violated; and (iii) if the petitioner’s fundamental rights have been violated. 9. He also relied upon another decision of the Apex Court in case of Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai and others, reported in (1998) 8 Supreme Court Cases 1 in which it had been held that alternative remedy will not operate as a bar in at least three - 6 - contingencies, namely (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is violation of principles of natural justice; or (iii) where the order or the proceedings are wholly without jurisdiction or the vires of an Act is challenged. Another decision of the Apex Court in case of State of Punjab and others vs. Bhatinda District Cooperative Milk Producers Union Ltd., reported in (2007) 11 Supreme Court Cases 363 had also been relied upon by learned counsel for the petitioner. 10. Learned counsel for the petitioner further relied upon a decision of the Apex Court in case of Balco Captive Power Plant Mazdoor Sangh and another vs. National Thermal Power Corporation and other, reported in (2007) 14 Supreme Court Cases 234 in which it had been held that alternative remedy is a rule of discretion and not the rule of law and hence even if the petitioner has any proper remedy under any other provision, the writ petition is maintainable with respect to interpretation of certain clauses in the agreement and where no disputed facts are involved. A similar decision of the Apex Court has been relied upon in case of Rajsthan State Electricity Board vs. Union of India and others, reported in (2008) 5 Supreme Court Cases 632. 11. In the said circumstances learned counsel for the petitioner submits that the petitioner was quite justified in filing of this writ petition for the redressal of her grievances and she cannot be forced to Arbitration. 12. On the other hand, learned counsel for the respondents vehemently challenged the contentions of learned counsel for the petitioner and submitted that this writ petition is not maintainable, as arbitration clause was specifically mentioned in the Special Conditions of the contract (Annexure-2) - 7 - and hence this case which involves disputed questions of fact cannot be properly decided in this writ petition. He further stated that it was specifically provided in the said agreement that stipulation provided in Special Conditions, including arbitration clause will take precedence over any provision if existing in Standard Conditions. 13. Learned counsel for the respondents claimed that the judgments relied upon by learned counsel for the petitioner were only in cases where arbitration was not provided or where there was a long delay and where there was no disputed question of fact. He further claimed that even if there is no gradation clause, petitioner cannot refuse from doing work as “no work” will automatically result in “no pay”. He further stated that the petitioner has admitted that work had not been done properly and hence clause-43 of the Agreement (Annexure-2) will be attracted which provides that seven days notice should be given to the contractor and if he does not start the work then 48 hours notice should be given to him, whereafter the agreement should be cancelled and the security money should be forfeited and step should be taken as provided in column 62 of the General Conditions of Contract. Hence he argued that in these circumstances the cancellation of agreement, forfeiture of security, imposition of fine as well as non-payment of contractual amount were justified in law. 14. Learned counsel for the respondents submitted that the work in question for which the parties had entered into the agreement relates to sanitation which is for the interest of public at large and this work has to be done to the satisfaction of the authorities and for that purpose grading of work was must and was incorporated in the terms and conditions of the agreement. He further averred that the grading of work is a policy of the respondents to - 8 - ensure assessment of quality of sanitation work to be done by the contractors like petitioner and the same grading system was also incorporated in the agreement entered into by the petitioner which is evident from a bare perusal of Clause-15, 34, 41, 43, 63 and 68 of the Agreement and hence the grading system is a gist of the contract entered into by the parties. He also stated that grading performance defines quality of work done as very good, good, average, below average and the said system was fully acknowledged by the petitioner from the date when the work order was granted as well as from the date when the petitioner entered into agreement with the respondents. 15. Learned counsel for the respondents averred that the petitioner never provided the required machines mentioned in the agreement for performance of the work allotted from the very beginning of the work which affected the quality of mechanized cleaning and even the few machines provided by her were not working properly and in addition to that the petitioner never provided the minimum required numbers of labourers as per the agreement which ultimately reflected in the quality of sanitation work for the station and hence the petitioner failed to comply even the basic contractual obligation from the very beginning, hence the respondents authorities gave strict instructions to the petitioner from time to time to improve the quality of sanitation works on 24.09.2010, 20.09.2010, 20.08.2010 and 16.08.2010 etc. (Annexure-E series), but even after repeated instructions the petitioner sat tight over the matter and never used the mechanization as agreed upon. 16. It is further stated by learned counsel for the respondents that when the authorized representative of the petitioner met the railway authority regarding payment of work on grading basis, the respondents finally decided to pay bills made on grading basis vide letter dated 20.10.2010 - 9 - (Annexure-F) and accordingly bills were prepared at Muzaffarpur and the petitioner was informed vide letter dated 28.09.2010 and 01.11.2010 (Annexure-G and H) to sign the bills so that it may be sent to the concerned authority for payment but the petitioner never turned up to sign the same and immediately thereafter on 19.11.2010 (Annexure-8 series) the petitioner quit the work in complete violation of the terms and conditions laid down by the agreement and hence the respondents informed the petitioner vide letter dated 15.11.2010 (Annexure-I) that if she choose to quit the work within the period of agreement action shall be taken against her. 17. He further stated that in view of the said circumstances, vide letter dated 22.11.2010 (Annexure-K), petitioner was given 7 days notice to restart the work but when the petitioner did not start the work even thereafter, another notice was sent by the respondents on 29.11.2010 (Annexure-L) giving 48 hours notice as per the Rules, but the petitioner did not respond even to the said notice and hence agreement dated 14.05.2010 (Annexure-2) was terminated on 03.12.2010 (Annexure-11) by the respondents and P.G. amount deposited by the petitioner was forfeited as per Clause-62 of the General Clauses of Contract. He also submitted that from the very beginning the work of petitioner was not found satisfactory and she had been fined on several occasions due to unsatisfactory work as per the provision of Clause-15 of the Agreement, but even then she did not improve, rather started committing a series of illegality and hence the respondents were compelled to take action against her in accordance with law. 18. From the arguments of learned counsel for the parties as well as from the materials on record, it is quite apparent that the claim of the petitioner is based upon the work order dated 16.03.2010 (Annexure-1) issued - 10 - by the respondents in favour of the petitioner as well as the agreement dated 14.05.2010 (Annexure-2) which was executed by the petitioner and the respondents authorities with respect to the work in question and the same is binding on both of them, so far the work in question is concerned. 19. From perusal of agreement dated 14.05.2010 (Annexure-2) which was sent by the authorities with their letter dated 03.06.2010, it is quite apparent that apart from the general conditions of contract there were some special conditions of contract also in which it had been clearly stated that stipulations provided in special conditions will take precedence over any provision if existing in Standard Condition. One of the special conditions of contract was the arbitration clause in which steps were detailed which were to be taken in the event of any dispute or difference of opinion between the East Central Railway and the contractor as to the respective rights and obligations of the parties as provided under the agreement. The work order dated 16.03.2010 (Annexure-1) issued by the respondent authority in favour of the petitioner also provided that the parties would be bound by the terms of the contract. 20. So far the instant disputes which have been raised by the petitioner are concerned, they involve disputed questions of fact with respect to the payment of bills according to the grading of work and alleged breach of the condition of agreement and cancellation of agreement which are all covered by the respective rights and obligations of the parties under the contract and hence the arbitration clause of the agreement squarely covers the said disputes which have been raised by the petitioner in this writ petition. 21. So far the reliance placed by learned counsel for the petitioner upon the decision of the Apex Court in case of Popcorn - 11 - Entertainment and another (Supra) as well as in case of Whirlpool Corporation (Supra) are concerned, they provide the conditions in which a writ petition would be maintainable even in a contractual matter i.e. (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is violation of principles of natural justice; or (iii) where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In the instant case, the writ petitioner does not seek enforcement of any fundamental right nor there is any violation of principles of natural justice as the petitioner was fully aware of the developments and the requirements and the steps taken by the authorities. Furthermore, neither the vires of any Act is challenged nor prima facie from the records of the case it can be held that the proceedings are absolutely and ab initio without jurisdiction, hence the aforesaid decisions are not applicable to the facts and circumstances of this case. 22. So far the decisions of the Apex Court relied upon by learned counsel for the petitioner in case of Balco Captive Power Plant Mazdoor Sangh and another (Supra), Rajsthan State Electricity Board (Supra) and State of Punjab and others (Supra) are concerned, it has been held therein that alternative remedy is a rule of discretion and not the rule of law and hence even if the petitioner has any proper remedy under any other provision, the writ petition is maintainable with respect to interpretation of certain clauses in the agreement and where no disputed facts are involved. In the instant case, it is quite apparent that the case of the petitioner is based on disputed questions of fact which has to be decided before allowing any relief to the petitioner. Hence there is no question of any discretion being exercised by this court in favour of the petitioner, specially when the adequate and - 12 - efficacious remedy of arbitration has been clearly provided in the agreement as well as in the statute for such disputes. In the said circumstances, the aforesaid decisions of the Apex Court relied upon by learned counsel for the petitioner are also not applicable to the facts and circumstances of the case. 23. So far the other decision of the Apex Court relied upon by learned counsel for the petitioner in case of Mahabir Auto Stores and Others (Supra) is concerned, it was specifically held therein that in cases where the instrumentality of the State enters the contractual field, it should be governed by the incidence of the contract, but having regard to the large number or the long period of dealings between the parties, the contractual matters cannot be excluded from the purview of judicial review to test its validity on the anvil of Article 14 of the Constitution. In the instant case, contract is the only dealing and there is no question of any large number of dealings between the parties nor there is any question of long period of dealing between the parties, as the agreement involved in the instant case had been entered into on 14.05.2010 and only a few months thereafter the dispute had arisen. Hence the instant dispute where the instrumentality of the State has entered into the contractual field it has to be governed by the incidence of the contract. 24. The matter has been fully considered by the Apex Court in case of State of U.P. and others vs. Bridge & Roof Company (India) Ltd., reported in 1996 (6) SC 22 in which it was specifically held that if the contract contains a clause providing inter-alia for settlement of disputes by reference to arbitration and the arbitrators can decide both the questions of fact as well as questions of law and hence when the contract itself provides mode of settlement of disputes arising from the contract, there is no reason why the - 13 - parties should not follow and adopt that remedy and hence the existence of effective remedy in this case provided in the contract itself is a good ground for the court to decline to exercise its extraordinary jurisdiction under Article 226 of the Constitution as the said Article was not meant to supplant the existing remedies at law but only to supplement them in certain well- recognized situations. 25. There is another decision of the Apex Court in case of ABL International Ltd. and another vs. Export Credit Guarantee Corporation of India Ltd. and others, reported in (2004) 3 Supreme Court Cases 553 in which it was held that a writ petition involving serious and disputed question of facts which requires consideration of evidence will not normally be entertained under Article 226 of the Constitution. There is nothing to show any reason to desist from the settled principle of law, when this writ petition involves disputed questions of fact and the petitioner has failed to show any very grave circumstance. 26. In view of the aforesaid discussions with respect to the decisions of the Hon’ble Apex Court as well as the settled principles of law and also in view of clear stipulations provided in the special conditions which according to the contract will take precedence over any provision, this court has no option but to decline to exercise its extraordinary jurisdiction under Article 226 of the Constitution of India. Accordingly, this writ petition is dismissed with a liberty to the petitioner to take steps as per the provisions of the contract between the parties. Harish/ N.A.F.R. (S.N. Hussain, J.)