WP (C) 10617 of 2006 Page 1 of 27 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of Decision: 8th January, 2010. + W.P.(C).No.10617/2006 Mohd.Haroon ..... PETITIONER Through:Mr.Sanjay Jain, Sr. Advocate with Mr. Navneet Panwar and Ms. Tani Sudan, Advocates. Versus Union of India and Another .... RESPONDENTS Through: Mr. R.K. Joshi, Advocate for Respondent no.2 CORAM: HON'BLE MR. JUSTICE ANIL KUMAR 1. Whether reporters of Local papers may be YES allowed to see the judgment? 2. To be referred to the reporter or not ? YES 3. Whether the judgment should be reported YES in the Digest? Anil Kumar, J. 1. The petitioner who is an auction purchaser has sought quashing of the entire auction for the lot numbers 39 and 59 comprising 5 containers of HMS scrap held on 15.6.2005 and consequently refund of a sum of Rs.19,17,760/- alongwith interest and Rs.2,20,814/- along with interest on account of penalty and ground rent charges till 31st March, 2006 and another amount of Rs.2,70,000/- paid by petitioner to the transporters whose trucks are lying at the bonded area since 3rd April, 2006. WP (C) 10617 of 2006 Page 2 of 27 2. Brief facts to comprehend the controversies are that the petitioner is in the business of trading in metal scrap in the name of M/s. Adil Tin Scrap Store, 462, Shahzada Bagh, Inderlok, Delhi- 110035. On 30.5.2005, respondent No.2 had published the auction notice dated 15.6.2005 (1/2005-2006) in the leading newspapers proposing to dispose of different materials including HMS contained in 30 containers by public auction on “As is where is” basis. In the auction notice neither the reserve price nor weight nor quantity was mentioned. 3. Pursuant to the auction notice petitioner paid the entry fee of Rs.250/- and also deposited a refundable security of Rs.20,000/- for participating in the auction. The dates of inspection of material at ICD, Tughlakabad were fixed on 10th, 13th and 14th June, 2005. 4. The petitioner contended that during the course of auction while inviting bids for the lots numbered at serial numbers 39 and 59 it was declared orally by the officials of the respondent no.2 that lot number 39 contained 4 containers and lot No.59 contained one container having approximately 19 tones of HMS scrap per container. Assertion of the petitioner is that relying on the representations and the details given by the respondent the petitioner formulated his bid and quoted an amount of Rs.15,10,000/- for lot no.39 and Rs.34,000/- for lot no.59. The bid of the petitioner was accepted and on acceptance of his WP (C) 10617 of 2006 Page 3 of 27 bid petitioner tendered the advance of 30% amounting to Rs.4,55,000/-. 5. According to the petitioner the respondents failed to complete the necessary formalities and hand over the goods to the petitioner entailing repudiation of the agreement and, therefore, a letter dated 11.8.2005 was sent to refund the part consideration already tendered by the petitioner. However, all the legitimate demands of the petitioner were thwarted by the officers of the respondent who being aware of the discrepancies in auction, directed the petitioner to desist from insisting on cancellation of auction and threatened with forfeiture of advance amount tendered by him. Consequently in order to salvage the situation and to minimize the loses the petitioner instead of seeking repudiation paid the balance payment within the extended time and also sought waiver of penal interest and ground rent and sent letter dated 18.10.2005. 6. The petitioner paid the entire amount, however, only 50% waiver of ground rent and penal interest was granted by the respondent and, therefore, petitioner approached the respondents on 3rd April, 2006 for obtaining delivery of goods and placed the trucks for transportation. When three containers bearing Nos.GATU 0409488, CPSU 1602659 and CPSU 5931249 were de-stuffed and goods were loaded on to the trucks the weight appeared to be less and on weighing the goods it transpired that the goods were far short of the quantity represented WP (C) 10617 of 2006 Page 4 of 27 to him at the time of auction by the respondent. The three containers had only about 12,500, 12,500 and 8,500 kgs of HMS scrap which was cumulatively 40% short of the quantity declared/represented at the time of auction. The petitioner, therefore, declined de-stuffing of remaining two containers and to take delivery of de-stuffed goods loaded in the trucks and by letter dated 7.4.2006 sought permission to stuff back the goods into the containers to avoid the truck retention charges and other incidental cost until the settlement of the dispute which request was summarily rejected and the petitioner was directed to take the delivery of the goods. 7. Contention of the petitioner is that he has reasons to believe that the approximate weight of scrap (HMS) in five containers at the time of arrival at the inland container depot was approximately 19 metric tones which was reflected in the respective bills of lading and also the Import General Manifest. The petitioner does not have these documents and so he approached the custom authorities to know about the valuation of the goods put up for auction under RTI Act vide application dated 20.4.2006. However, the information was not provided as the date of auction was wrongly mentioned as 30.5.2005. Even custom authorities refused to divulge any information and by letter dated 6.5.2006 respondents again called the petitioner to take delivery of the goods and by another letter dated 8.5.2006 the respondents again demanded the petitioner to take the goods which were auctioned on “as is where is” basis. The petitioner thereafter WP (C) 10617 of 2006 Page 5 of 27 served legal notice. The assertion of the petitioner is that he is losing Rs.5,000/- per day on account of ground rent and payment to the transporters besides brokerage and huge amount of capital invested in the goods. The action of the respondents is challenged inter alia on the grounds that the action of the respondents should be transparent in public offices and the respondents are liable to render information regarding the valuation of the goods. The respondent has knowingly and willfully given much inflated projection of the quantity of goods and deliberately failed to specify the quantity in the relevant auction notice which was though declared orally during the course of the auction. According to the petitioner the deliberate omission to mention the weight of the goods auctioned was in order to avoid the exposure of shortage that had occurred when the goods were in possession of the respondent. 8. The claim of the petitioner was resisted by the respondent and the reply was filed on behalf of respondent No.2. It was asserted that the petitioner has suppressed the material facts. The auction notice categorically stipulated that the materials shall be sold on “As is where is basis” and opportunity to inspect the material was given to the petitioner who had inspected the material and had declared that he had “inspected the material upto his entire satisfaction”. No reserve price nor the weight nor the quantity were declared and the petitioner after making the highest bid in the auction also deposited the consideration in terms of the auction, now wants to wriggle out of the WP (C) 10617 of 2006 Page 6 of 27 contract. The respondent relied on the letter dated 6.9.2005 by the petitioner whereby he sought taking of delivery after one month on account of huge loss suffered by the petitioner in his absence. The letter dated 6.9.2005 of the petitioner is as under:- To, The G.M.Commercial TKD ICD, Delhi. Sub: Extension of period of taking delivery of lot No.39 & 59 Auction dated 15.6.2005. Respected Sir, Reference to your letter dated 30.8.05 we are now not in a position to take the delivery due to huge loss in my business we want to take the delivery of the above lots after one month. So, please grant me permission to take the delivery after one month. Thanking you Yours Sincerely Haroon (ADIL TIN STORE) 9. By another letter dated 26.12.2005 the petitioner again sought waiver of late payment and ground rent charges as the market of HMS was decreasing day by day. Considering the request of the petitioner the respondent waived 65% against due TSC and allowed full waiver of late payment of 2% monthly surcharge. The respondent No.2 was categorical that for none of the items, the reserve price was mentioned nor the weight nor the quantities were mentioned, as the goods were WP (C) 10617 of 2006 Page 7 of 27 to be auctioned on “As is where is basis”. The petitioner after inspecting the goods on 14.6.2005 had also circulated that he had read and understood the terms and conditions of sale through auction which was held as per terms and conditions which were read and understood by the petitioner. Petitioner had paid full balance payment of Rs.2,47,160/- inclusive of sales tax against lot No.59 without payment of applicable late payment surcharge and the ground rent and no demand was made against lot no.39. An amount of Rs.7,74,472/- was deposited by the petitioner on 17.2.2006 towards lot no.39 and the balance amount was paid on 18.2.2006 and an amount of Rs.2,20,814/- paid towards ground rent and surcharge. 10. The allegation of the petitioner that the weight of the goods was orally disclosed at the time of auction was refuted by the respondent contending that no weight or quantity was disclosed nor any claim in that regard could be entertained. The respondent contended that they were entitled to fix the terms and conditions of the auction under section 64 of the Sale of Goods Act which were fixed and the auction was held on those terms and conditions only. The goods for auctioned on '"as is where is basis". Neither the reserve price was fixed nor the weight was disclosed. The bids were submitted by the petitioner after inspecting the goods and bid of the petitioner was accepted leading to a concluded contract between the parties. According to respondents, the petitioner is not entitled to modify, change or vary the terms of the agreement. Referring to section 48 of Customs Act, it was pleaded that WP (C) 10617 of 2006 Page 8 of 27 the goods were not auctioned under the provisions of said section as the said section has no application in the facts and circumstances of the case. Regarding notifications relied on by the petitioner, it is contended that those notifications were not applicable in respect of goods auctioned by the respondent and purchased by the petitioner. In the circumstances respondents contended that the petitioner is liable to remove the goods and the respondents are not liable either to refund the amount already paid by the petitioner nor are liable to refund any other amount claimed by him nor the respondents are liable to pay interest on the amounts claimed. The respondents also contended that petitioner cannot invoke the writ jurisdiction under Article 226 of Constitution of India for the purpose of altering the terms and conditions of the contract or to seek cancellation of the same and claim punitive damages and the writ petition is wholly misconceived. 11. The petitioner has relied on Ram Chander Vs Savitri Devi, (2003) 8 SCC 319; ABL International Ltd. & anr Vs Export Credit Guarantee Corporation of India & ors, (2004) 3 SCC 553 and M.K.Shah Engineers & Contractors Vs State of Madhya Prades (1999) 2 SCC 594. Reliance has also been placed on RAdhakrishna Agarwal & ors. vs State of Bihar & ors, (1977) 3 SCC 457 and Ramchandra Singh vs Savitri Devi & ors, (2003) 8 SCC 319 WP (C) 10617 of 2006 Page 9 of 27 12. Per contra the learned counsel for the respondent has referred to In Orissa Agro Industries Corporation Ltd. v. Bharati Industries and Ors. (2005) 12 SCC 725; State of Punjab v. Dial Chand Gian Chand and Company. AIR 1983 SC 743; State of Haryana and Ors. v. Lal Chand and Ors. AIR 1984 SC 1326; Assistant Excise Commissioner and Ors. v. Issac Peter and Ors. (1994) 4 SCC 104; Tata Cellular v. Union of India. (1994) 6 SCC 651; Consolidated Coffee Ltd. v. Coffee Board, Bangalore. AIR 1980 SC 1468; Hari Shanker Vs Dy.EE & T Commissioner, AIR 1975 SC 1121, T.N Electricity Board Vs N Raju Reddiar, AIR 1966 SC 2025;State of Haryana Vs Lal Chand, AIR 1984 SC 1326; Steel Authority of India Ltd. Vs National Union Water Front Workers, (2001) 7 SCC 63 and Asst. Excise Commissioner Vs Issac Peter, (1994) 4 SCC 125 in support of pleas and contentions on behalf of the respondent. 13 The learned counsel for the parties were heard at length and writ petition, reply and the documents and the judgments relied on by the parties have been perused. It may not be necessary to refer to all the precedents relied on by the parties as the ratio of one case cannot be mechanically applied to another case without having regard to the fact situation and circumstances obtaining in two cases as was held by the Supreme Court in Rafiq VS State, 1980 SCC (Crl.) 946. The ratio of any decision must be understood in the background of the facts of that case. What is of the essence in a decision is its ratio and WP (C) 10617 of 2006 Page 10 of 27 not every observation found therein nor what logically follows from the various observations made in it. It must be remembered that a decision is only an authority for what it actually decides. It is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision. It is also well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision. The Supreme Court in Bharat Petroleum Corporation Ltd and Anr. v. N.R.Vairamani and Anr. (AIR 2004 SC 778) had also held that a decision cannot be relied on without considering the factual situation. In the same judgment the Supreme Court also observed:- " Court should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. 14. In the light of the proposition of the Supreme Court, lets consider some of the precedents relied on by the parties. The petitioner has relied on ABL International Ltd and Anr. Vs. Export Credit Corporation of India Ltd, (2004) 3 SCC 553 holding that disputed questions of fact can be considered in an appropriate case WP (C) 10617 of 2006 Page 11 of 27 and the writ Court has jurisdiction to entertain such a writ petition and there is no absolute power in regard thereto. The Apex Court had held that a writ petition involving serious disputed questions of facts which requires consideration of evidence which is not on record, will not normally be entertained by a Court in the exercise of its jurisdiction under Article 226 of the Constitution, but there is no absolute rule that in all cases involving disputed questions of fact, the parties should be relegated to a Civil suit. Relying on Gunwant Kaur's Case, (1969) 3 SCC 769 it was held that if the facts required, oral evidence can be taken and consequently in an appropriate case the writ Court will have jurisdiction to entertain a writ petition involving disputed questions of fact and there is no absolute bar for entertaining a writ petition even if the same arises out of a contractual obligation and/or involves some disputed questions of fact. However in ABL International Ltd (supra) the point involved was the interpretation of contract without any external aid. In fact no detailed disputed questions of facts were involved. 15. In State of Bihar Vs. Jain Plastic and Chemicals Ltd, (2002) 1 SCC 216, the Apex Court had held in para 7 as under: 7. In our view, it is apparent that the order passed by the High Court is, on the face of it, illegal and erroneous. It is true that many matters could be decided after referring to the contentions raised in the affidavits and counter- affidavits, but that would hardly be a ground for exercise of extraordinary jurisdiction under Article 226 of the Constitution in case of alleged breach of contract. Whether the alleged non-supply of road permits by the WP (C) 10617 of 2006 Page 12 of 27 appellants would justify breach of contract by the respondent would depend upon facts and evidence and is not required to be decided or dealt with in a writ petition. Such seriously disputed questions or rival claims of the parties with regard to breach of contract are to be investigated and determined on the basis of evidence which may be led by the parties in a properly instituted civil suit rather than by a court exercising prerogative of issuing writs. 16. From the above it is apparent that normally if a writ involves serious disputed questions of fact which requires consideration of evidence which is not on record then it will not be entertained by a Court in the exercise of its jurisdiction under Article 226 of the Constitution of India, however, this does not lay down an absolute rule. In a petition under Article 226 of the Constitution of India the High Court has jurisdiction to try issues both of fact and law and High Court is not deprived of its jurisdiction as the discretion is with the High Court, which is to be exercised on sound judicial principles. When a writ petition raises questions of fact of a complex nature, which may for their determination require oral evidence to be taken and on that account if the High Court is of the view that the disputes may not be appropriately tried in a writ petition, the High Court may decline to try such petition. The petitioner has also placed reliance on Manu/SC/0053/1977, Radha Krishna Aggarwal and others Vs. State of Bihar and others where the division of types of cases in which breaches of obligation by the State or its agent can be set up as detailed by the Patna High Court was approved by the Apex Court. The types of cases of breaches were stated as follows:- WP (C) 10617 of 2006 Page 13 of 27 i) Whether the petitioner makes “a grievance of breach of promise on the part of the State in cases where on the assurance or promise made by the State he has acted to his breach or predicament, but the agreement is short of a contract within the meaning of Article 226 of the Constitution; ii) Where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under certain Act or rules framed thereunder and the petitioner alleges a breach on the part of the State; iii) Where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract and the petitioner complains about breach of such contract by the State.” 17. Relying on (2005) 12 SCC 725, Orissa Agro Industries Corporation Ltd Vs. Bharat Industries and Others the learned counsel for the respondents, Mr. Joshi challenged the efficacy of a writ jurisdiction, as the writ petition involves disputed questions of fact. In the said case the dispute was about the valuation of articles left by the petitioner and it was held that the valuation of the goods left will involve complicated question of fact and the material requires thorough proof on factual aspects and in the circumstances the High Court ought not to have entertained the writ petition. The Apex Court was of the view that whether or not the High Court should exercise jurisdiction under Article 226 of the Constitution would largely depend upon the nature of the dispute and if the dispute cannot be resolved without going into the factual controversy the High Court should not entertain the writ petition. The question whether the action WP (C) 10617 of 2006 Page 14 of 27 of the opposite party in the writ petition amounted to breach of contractual obligation ultimately depends on the facts and would require material evidence to be scrutinized and in such a case writ jurisdiction should not be exercised. The Apex Court had also referred to the case of Radha Krishna Aggarwal (Supra) holding that where the contract entered into between the State and the person aggrieved is non statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract and in exercise of executive power of the State, no writ order should be issued under Article 226 to compel the authorities to remedy a breach of contract pure and simple especially when factual disputes are involved. 18. With these guiding principles let us consider the disputes involved in the present writ petition. The case of the petitioner is that under the statutory provisions of the Customs Act and the notifications issued the weight of the consignment which was auctioned on “ As is where is” basis ought to have been declared and in fact as per the petitioner before the auction the weight was disclosed orally to be 19 metric tones. According to Sh. Jain, Learned counsel for the petitioner in the valuation got done by the respondent, which is also based on the bill of entry, the weight is about 20.1. The weight of four containers is about 20.574 metric tons whereas the weight of one container bearing No.GATU 0409488 is about 20.10 metric tones. His plea is that the various documents including WP (C) 10617 of 2006 Page 15 of 27 valuation reports containing the weight of the containers which were auctioned were not made public and consequently there was no way for the petitioner to know the weight of the container. Since the petitioner was given the weight as 19 metric tons which was disclosed to him before the auction which is quite approximately near to the weight mentioned in the documents, the natural inference is that the weight was disclosed to the petitioner before the auction and he participated in the auction on the promise that the container holds about 19 metric tons of scrap on “As is Where is” basis. 19. According to the petitioners the imported goods lying unclear are classified into two categories viz, a) goods confiscated under the Customs Act, 1962 and (b) goods not confiscated but lying uncleared/unclaimed. Goods of category (a) are disposed of by the Customs Department through the disposal units of the department and it is their responsibility. However, the goods in category (b) are disposed of by the custodian who has to make a list of the imported goods which lay uncleared/unclaimed for more than 45 days and then has to send the list of such goods to the customs on monthly basis. Relying on the circulars of the customs it was contended that the list which is sent of the uncleared imported goods should contain complete particulars such as airways bill number, description of goods, weight, name of