LPA No. 313 of 2003 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH LPA No. 313 of 2003 (O&M) Date of decision: September 8, 2011 Punjab School Education Board another ...Appellants Versus M/s Akal Printmatics and others ...Respondents CORAM:- HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE GURDEV SINGH Present: Mr. NPS Mann, Advocate, for the appellants. Mr. Suvir Sehgal, Additional Advocate General, Punjab, for respondent No.3. 1. To be referred to the Reporter or not ? 2. Whether the judgment should be reported in the Digest ? GURDEV SINGH, J. 1. This instant appeal under Clause X of the Letters Patent has been filed by the appellants against the order dated 14.5.2003, vide which the learned Single Judge allowed the writ petition filed by the present respondents No.1 & 2—writ petitioners, and quashed the orders, Annexures P2/A to P2/C, passed by the appellant-Board and directed them to refund the amount of excess penalty, deducted from the bills payable to petitioner No.1, alongwith interest @ 9% per annum from the date of levy of penalty till date of payment. The needful was directed to be done within two months LPA No. 313 of 2003 2 from the date of submission of the certified copy of the order. 2. The petitioner No.1 is a registered partnership concern and petitioner No.2 is the registered partner thereof. It is a small scale industry engaged in the business of printing, binding and supply of text books. The tenders submitted by it with the appellant-Board were accepted and thereafter, three separate agreements were executed between them, vide which they were to print 70,000 copies of 'Aao Hindi Seekhain-B', 1,80,000 copies of 'Vigyan-4 (Punjabi)' and 35,000 copies of 'Vigyan (History)' for the academic Session of 1984-1985. After printing those books, three separate bills dated 19.11.1984 for Rs. 22,785/-; Rs. 30,901.40 paise and Rs. 6,649.35 paise were submitted. The books were not printed within the prescribed time and, as per the terms of the agreements, maximum penalty of 50% of the amount of the total bills could have been imposed. However, in respect of printing of first book, a penalty by way of 70% deduction from bill No.1; in respect of printing of second book, penalty by way of deduction of 85% from the amount of bill No.2, and in respect of printing of third book, penalty by way of deduction of 65%, out of total amount of bill No.3, was imposed and they were informed about the deduction of that penalty, vide letters dated 10.6.1985, 3.8.1985 and 15.4.1985 (Annexures P2/A, P2/B and P/2C respectively). An objection with regard to the levy of special penalty was raised, vide letter dated 3.7.1985, by stating therein that there is no ground to levy special penalty. The appellants maintained that the penalty was imposed in accordance with the terms of the agreements. 3. In the writ petition, the petitioners prayed for issuance of a writ in the nature of Certiorari, quashing the provisions of Sections 22 and 23 of the Punjab School Education Board Act, 1969 (for brevity—'the Act'), LPA No. 313 of 2003 3 being unconstitutional, unfair, unjust and arbitrary. They prayed for quashing the impugned orders Annexures P2/A to P2/C, being illegal, void and not in accordance with law. They pleaded that, as per the terms and conditions of the agreements, the maximum penalty of 50% of the total bills could have been imposed and penalty in excess thereof was illegal. Thus, imposition of excess penalty of 15% to 35% is violative of those terms. No opportunity of hearing was afforded to them before passing the impugned orders. Those orders are patently absurd and are in clear violation of the agreements. Section 23 of the Act creates a bar to the jurisdiction of the Courts which prevents them from instituting any suit in the matter in any civil court. In response to their letter dated 3.7.1985 (Annexure P/3), they received reply dated 6.11.1985 (Annexure P/4) from the side of the appellants asserting that the action taken by them was in accordance with the agreements. Considering that decision to be an award under the Arbitration Act, 1940 (for brevity—'the 1940 Act'), they were advised to file an application under Section 33 read with Sections 15 and 30 of the 1940 Act in the court for setting aside that award. Accordingly, they filed three separate identical applications in the court of Senior Civil Judge at Chandigarh on 6.12.1985. In reply to those applications, the appellants sought to invoke the bar of jurisdiction of the Civil Court, by virtue of Section 23 of the Act and maintained that the decision (Annexure P/4) could not be considered to be an arbitration award, as the 1940 Act has no applicability to the administrative decision of the Board. In view of that reply, they filed an application for withdrawal of all the three cases and accordingly, challenged the provision of Section 23 of the Act, being unconstitutional by filing writ petition relatable to the instant appeal. LPA No. 313 of 2003 4 4. The appellants in their written statement took up the preliminary objections that under the provision of Section 17 (2) of the Act, the appellant-Board has to exercise and perform the powers and functions to arrange for preparation, writing, compilation, printing, publishing and sale of text books etc., which is one of the powers and functions of the Board. They pleaded that, as per Section 23 of the Act, no order or decision taken by the Board or its Chairman is to be called in question in any court of law. Sections 22 and 23 of the Act specifically bar the jurisdiction of the civil court. The contract was entered at Mohali and, as such, no cause of action has arisen at Chandigarh. As there is no arbitration clause in the agreements in question, so the provisions of the 1940 Act are not attracted. While giving reply to the contentions of the petitioners, on merits, the appellants admitted that after the tenders were submitted, agreements were executed between them and the petitioners. In accordance with the terms and conditions of those agreements, they were to print the books so mentioned in the writ petition and that on account of late supply of those printed books, penalty was imposed upon the petitioners. They did not revoke the order imposing that penalty after the letter was received by them from the petitioners. They denied the other contentions made in the writ petition and pleaded that the job was required to be completed on or before 15.3.1984, as the academic session for the year 1985, for which these books were required, was to started from 1.4.1984. Those books were to be provided to the students by the Board. The academic Session was almost over when those books were supplied. The same were supplied after 11 months and three days of the agreed period of schedule. On account of non-furnishing of the books to the students, the Board suffered financial loss as well as loss to LPA No. 313 of 2003 5 its reputation. It was on that ground that such heavy penalty was imposed for the breach of the contract. The agreement provided for a heavier penalty than 50% and they were within their rights to levy such penalty. They acted in a bonafide manner, as envisaged by the terms of the agreement and the provisions of the Act and, as such, this Court cannot go into the trial of the matter in question. 5. Before the learned Single Judge, the prayer made in the writ petition challenging the vires of Section 23 of the Act was not pressed. The only issue, which survived for consideration was, whether the penalty imposed by the Board, vide Annexures P2/A to P2/C for causing delay in printing of the books ultra-vires paragraph 20 (1) of the Agreement (Annexure R2/1). After hearing learned counsel for the parties and going through the pleadings and the record, the learned Single Judge decided the above issue in favour of the petitioners and passed the above said order. 6. We have heard learned counsel for the parties. 7. It has been submitted by the learned counsel for the appellants that the writ petition itself was not maintainable, as after the prayer declaring Section 23 of the Act as ultra-vires was not pressed, the matter in question was only regarding interpretation of the terms of the agreements. The petitioners had the alternate remedy of approaching the civil court for the other relief claimed in the writ petition. The impugned order is liable to be set aside on that ground alone. He further submitted that the terms of the agreements envisaged not only the imposition of the penalty to the extent of 50% of the total amount of the bill, but also much more than that. It was by invoking the terms of the agreement itself that penalty in excess of 50% was imposed. The penalty of 50% was to be imposed when there was delay upto LPA No. 313 of 2003 6 80 days. In the present case, there was delay of 11 months and 3 days, when the academic session, for which the books were required, was almost over. The Board suffered damages on account of non-supply of the books in time. It was on that account that penalty in excess of 50% was imposed. 7. We are not impressed by the submissions made by the learned counsel for the appellants. The availability of an alternate remedy is not an absolute bar to the exercise of writ jurisdiction by this Court under Article 226 of the Constitution. The Hon'ble Supreme Court in Union of India & Ors versus Tantia Construction Pvt. Ltd. 2011 (3) RCR (Civil) 821 has recently held as under:- “Apart from the above, even on the question of maintainability of the writ petition on account of the Arbitration Clause included in the agreement between the parties, it is now well-established that an alternative remedy is not an absolute bar to the invocation of the writ jurisdiction of the High Court or the Supreme Court and that without exhausting such alternative remedy, a writ petition would not be maintainable. The various decisions cited by Mr. Chakraborty would clearly indicate that the constitutional powers vested in the High Court or the Supreme Court cannot be fettered by any alternative remedy available to the authorities. Injustice, whenever and wherever it takes place, has to be struck down as an anathema to the rule of law and the provisions of the Constitution. We endorse the LPA No. 313 of 2003 7 view of the High Court that notwithstanding the provisions relating to the Arbitration Clause contained in the agreement, the High Court was fully within its competence to entertain and dispose of the Writ Petition filed on behalf of the Respondent Company.” 8. The appellant-Board is an instrumentality of the State and falls within the term 'State' as defined under Article 12 of the Constitution and, as such, it was amenable to writ jurisdiction of this Court. Moreover, the constitutional validity of Section 23 of the Act was also challenged in the writ petition. Therefore, it cannot be said that the writ petition itself was not maintainable and is a ground for setting aside the impugned order. 9. The relevant clause of the agreement which pertains to the penalties is re-produced below:- “PENALITIES 20 (i) For late execution of Order:- Failure on the part of the printer to make supplies within the stipulated period will render him liable to imposition of the penalty as per the following schedule:- From the date of receipt of paper plus ___ days (no penalty). (i) For delay from 1 to 10 days 1% of the amount of the valid bill for the job excluding the cost of paper. (ii) For delay from 11 to 20 days 3% -do- (iii) For delay from 21 to 30 days 5% -do- (iv) For delay from 31 to 40 days 8% -do- (v) For delay from 41 to 50 days 12% -do- (vi) For delay from 51 to 60 days 20% -do- LPA No. 313 of 2003 8 (vii) For delay from 61 to 70 days 30% -do- (viii) For delay from 71 days and onwards 50% -do- Important For this delay besides this penalty, any other action may be taken as may be decided by the Chairman of the Board....” 10. From the bare perusal of this clause, it is abundantly clear that the appellant-Board could not have imposed the penalty beyond 50% in case of delay in printing and supply of the books. No doubt, this clause empowered the Board to take any other action, which may be decided by the Chairman. However, 'any other action' could not have been the imposition of penalty in excess of 50%. It could have claimed the damages but for that the Chairman was to take an independent decision. It was rightly concluded by the learned Single Judge as under:- “...Therefore, it must be held that the levy of penalty in excess of the limit agreed upon between the parties is ultra vires to paragraph 20 (1) of the contract and being a creature of the statute, the Board can not act in violation of the terms of contract entered into with petitioner No.1...” 11. We do not find any ground to disagree with the finding so recorded by the learned Single Judge. The appeal does not warrant admission. There is, thus, no merit in this appeal and the same is hereby dismissed. (M.M. KUMAR) (GURDEV SINGH ) JUDGE JUDGE September 8, 2011 prem LPA No. 313 of 2003 9