m "r IN THE HIGH COURT OF DELHI AT NEW DELHI CW No.18634-35.2005 G.V.K. Industries Limited & Anr. ...Petitioners through Mr. C.A. Sundaram, Sr. Adv. Mr. Manmohan, Sr. Advocate with Mr. P.C. Sen, Mr. Ramesh Singh and Mr. A. Babu, Advocates Versus Central Electricity Authority ...Respondent through & Qrs. Mr. P.P.Malhotra, ASG with Mr. Aijun Harkauli and Ms. Preeti Khanna, Advocates for Respondents 1 & 4 Mr. A.T.M. Ranga Ramanujam, Sr. Adv. with Ms. Gouri K. Das and Mr. R.K. Sharma, Advs. Date of Hearing : February 16, 2006 Date of Decision: February 27, 2006 CORAM: HON'BLE MR. JUSTICE VIKRAMAJIT SEN 1. Whether reporters of local papers may be allowed to see the Judgment? YES 2. To be referred to the Reporter or not? YES 3. Whether the judgment should be reported in the Digest? YES : VIKRAMAJIT SEN. 1. 1. The Petitioner has prayed for the issuance of an WP(C) No.18634-35/2005 Page 1 of41 Digitally Signed By:AMULYA Signing Date:12.10.2023 10:36 Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified \ appropriate writ. Order or direction to the Central Electricity Authority (CEA) to take a decision on the approval of the completed cost of the subject power project established and commissioned by the Petitioner in Andhra Pradesh. The CEA had commenced proceedings earlier, but with the enforcement of the Electricity Act, 2003 has now adopted the view that its jurisdiction has been taken away. A host of preliminary or technical objections have been raised. PRELIMINARY OBTECTIONS 2. By way of prefatory remarks, generally speaking, the writ jurisdiction of the High Court under Article 226 of the Constitution cannot be circumscribed, and the fetters and frontiers are almost entirely judicially self imposed. One of the question that had arisen before the Constitutional Bench comprising seven learned Judges of the Supreme Court in landmark precedent titled L. Chandra Kumar vs. Union of India, (1997) 3 SCC 261 was whether the powers of the High Court under Article 226 of the Constitution could be WP(C) No.18634-35/2005 Page 2 of 41 curtailed by statutes such as the Administrative Tribunals Act, 1985. The Court pronounced that the powers of judicial review over legislative action vested, inalienably, in the High Courts under Article 226 and in the Supreme Court under Article 32 of the Constitution, and were integral and essential features of the Constitution constituting part of its basic structure. Ordinarily, therefore, the power of these Courts to test the constitutional validity of legislations could not be ousted or excluded. It was further held that the power vested in the High Courts to exercise judicial superintendence over the decisions of all Courts and Tribunals within their respective jurisdictions was also a concomitant of the basic structure of the Constitution. Divesting the High Courts of these powers had therefore to be abjured. It was further held that the provisions of the statute which excluded the jurisdiction of the High Courts and the Supreme Court, such as Section 28 of the Administrative Tribunals Act, 1985 were unconstitutional. The Apex Court has on several occasions including Harbans Lai Sahni v. Indian Oil Corporation Ltd., (2003) 2 SCC 107 WP(C) No.18634-35/2005 Page 3 of 41 -(• •yl explained the effect of existence of alternative remedies on the maintainability of a writ petition. In that case the relationship between the parties was contractual and the Dealership agreement contained an arbitration clause. Nevertheless the appeals were allowed by the Supreme Court, which opined thus : 7. So far as the view taken by the High Court that the remedy by way of recourse to arbitration clause was available to the appellants and therefore the writ petition filed by the appellants was liable to be dismissed is concerned, suffice it to observe that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies : (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. (See Whirlpool Corpn. vs. Registrar of Trade Marks). The present case attracts applicability of the first two contingencies. Moreover, as noted, WP(C) No.18634-35/2005 Page 4 of 41 the petitioners' dealership , which is their bread and butter, came to be terminated for an irrelevant and non-existent cause. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings. (A) Disputed Questions of Fact 3. On behalf of Respondent No.2 it has been contended that the disputes raised in the petition relates to adjudication of several delicate questions of fact which require evidence for computing Completed Capital Cost of the project from Rs.866 crores to Rs.l025 crores and, therefore, since complicated questions of fact would inevitably arise, the writ petition should not be entertained. This objection manifests a failure to appreciate and fully comprehend the prayers in the writ petition. The Petitioner does not challenge the capital cost of the project; in fact this has not been determined as yet. The legal conundrum which has to be unravelled in this case is whether the CEA still retains the power to fully and completely carry out this determination. In deciding this WP(C) No.18634-35/2005 Page 5 of 41 r issue no complicated questions of fact arise. In fact it is a pure question of law. 3.1 In ABL International Ltd. vs. Export Credit Guarantee Corporation of India Limited, JT 2003 (10) SC 300 the following principles have been culled out and explained : 27. From the above discussion of ours, following legal principles emerge as to the maintainability of a writ petition:- (a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable. (b) Merely because some disputed questions of facts arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule. (c) A writ petition involving a consequential relief of monetary claim is also maintainable. 28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the Court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by WP(C) No.18634-35/2005 Page 6 of 41 •t any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The court has imposed upon itself certain restrictions in the exercise of this power [See: Whirlpool Coiporation v. Registrar of Trade Marks, Mumbai & Ors. JT 1998 (7) SC 243 : 1998 (8) SCC 1]. And this plenary right of the High Court to issue a prerogative writ will not normally be exercised by the court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the court thinks it necessary to exercise the said jurisdiction. (B) Delay and Laches 4. On behalf of Respondent No.2 it has also been contended that the petition ought to be dismissed on account of latches. Avowedly, the Petitioner has been reminding the CEA. to complete the computation of capital costs of the project for several years. The cause of action for filing the present petition, however, is the somersault in the WP(C) No.18634-35/2005 Page 7 of 41 % position taken by the Respondents, namely, that it is the State Electricity Authority and not the Central Electricity Authority which must now carry out this exercise. The question of delay and latches would arise if this decision had been taken several years ago. Learned counsel for the Petitioner has rehed on the pleadings of this Respondent to the effect that Respondent No.l must rule on the completed capital cost of the project. Even if these pleadings can be read to convey a different meaning, it is nobody's case that Respondent No.l had declined to perform this obligation so much before the filing of this petition that the principles of laches would intervene. The objection is vexatious and meritless. (C) Effect of Arbitration Clause 5. The existence of an arbitration clause between the parties has also been used as ammunition for carrying out an assault on the consideration of the writ petition. As has been seen above the question which falls for consideration in this writ petition is whether it is the CEA or the SEA which is WP(C) No.18634-35/2005 Page 8 of41 2^^ competent to compute the completed capital cost of the project. No doubt, after the computation is fully undertaken, disputes may arise which could prima facie be covered by the arbitration clause. It is not for Arbitrators to rule on legal issues beyond arbitrable disputes. 5.1 When the Writ Court is faced with the existence of an Arbitration Clause it must be careful not to venture into the field of the Arbitrator. Equally, the Arbitrator is not competent to decide issues beyond the parameters of arbitrable disputes. There may be several aspects of a dispute which fall beyond the sweep of the Arbitration Clause. For example, in Haryana Telecom Ltd. vs. Sterlite Industries (India) Ltd., (1999) 5 SCC 688, in which it has been opined that Section 8 of the Arbitration & Concihation Act contemplates the reference to the Arbitrator of only those disputes which the Arbitrator is competent or empowered to decide. In the present case there are several disputes that have arisen between the parties, not all of which would automatically become arbitrable. WP(C) No.18634-35/2005 Page 9 of 41 (D) Tenitoiiality 6. The territorial jurisdiction of this Court has been assailed by way of preliminary objection. The decision in Patel Roadways Limited Bombay vs. M/s. Prasad Trading Company, AIR 1992 SC 1514 is that if a Corporation has a subordinate office in the place where the cause of action arises, litigation must be commenced in that place alone, regardless of apparently wider enabling provision in Section 20 of the Code of Civil Procedure. The Court adopted a realistic, businesslike and expedient approach in opining that - "It would be a great hardship if, in spite of the Corporation having a subordinate office at the place where the cause of action arises (with which in all probability the plaintiff has had dealings), such plaintiff is to be compelled to travel to the place where the Corporation has its principal place. That place should be convenient to the plaintiff; and since the Corporation has an office at such place, it will also be under no disadvantage". The significance of this Judgment is that it restricts jurisdiction, whether a contractual clause of this nature exists WP(C) No.18634-35/2005 Page 10 of 41 r or not to the particular place where the cause of action has substantially arisen, overruling other places which may have jurisdiction under Section 20 of the CPC. This rationale commends itself even in the context of Article 226 of the Constitution of India. 6.1 An analysis of the various pronouncements of the Supreme Court reveals that even though the express terms of Section 20 of the CPC permit the filing of a suit against a Corporation at its principal office, primacy and preeminence has been accorded to the place where the cause of action had substantially arisen, as against those places where it has incidentally or partially arisen. Whilst the Supreme Court has indubitably enumerated in ABC Laminart vs A.P. Agencies, AIR 1989 SC 1239 = 1989(2) SCC 163 the several places where the cause of action could be seen to have arisen, this was done primarily to investigate and determine whether the place to which jurisdiction had been restricted, by ousting all others, itself enjoyed jurisdiction. Otherwise, as is trite, such a clause would become legally unefficacious since it is not WP(C) No.18634-35/2005 Page 11 of 41 V possible to infuse by contract jurisdiction on Court which does not otherwise possess it. The position that obtains today is that primacy is accorded to the place where the cause of action substantially arises. The following passage of ABC Laminart is extremely instructive: 15. In the matter of a contract there may arise causes of action of various kinds. In a suit for damages for breach of contract the cause of action consists of the making of the contract, and of its breach, so that the suit may be filed either at the place where the contract was made or at the place where it should have been performed and the breach occurred. The making of the contract is part of the cause of action. A suit on a contract, therefore, can be filed at the place where it was made. The determination of the place where the contract was made is part of the law of contract. But making of an offer on a particular place does not form cause of action in a suit for damages for breach of contract. Ordinarily, acceptance of an offer and its intimation result in a contract and hence a suit can be filed in a court within whose jurisdiction the acceptance was communicated. The performance of a contract is part of cause of action WP(C) No.18634-35/2005 Page 12 of 41 "1 V and a suit in respect of the breach can always be filed at the place where the contract should have (been) performed or its performance completed. If the contract is to be performed at the place where it is made, the suit on the contract is to be filed there and nowhere else. In suits for agency actions the cause of action arises at the place where the contract of agency was made or the place where actions are to be rendered and payment is to be made by the agent. Part of cause of action arises where money is expressly or impliedly payable under a contract. In cases of repudiation of a contract the place where repudiation is received is the place where the suit would lie. If a contract is pleaded as part of the cause of action giving jurisdiction to the Court where the suit is filed and that contract is found to be invalid, such part of cause of the action disappears. The above are some of the connecting factors. 6.2 In Sector Twenty One Owners Welfare Association vs. Air Force Naval Housing Board, 65(1997) DLT 81 (DB), a Division Bench of this Court has held that a trivial or insignificant part of the cause of action arising at a particular place would not be enough to confer writ jurisdiction on the WP(C) No.18634-35/2005 Page 13 of 41 court to entertain the lis. The Division Bench deduced from various precedents that the emphasis had shifted from the residence or location of the person or authority sought to be proceeded against to the situs of the accrual of cause of action. There is no reason why the observations pertaining to writ petitions should not be extrapolated and inter changed between suits and writ petitioners. The Bench held as follows "13. The law as reflected by the above-said decisions is that the emphasis has shifted from the residence or location of the person or authority sought to be proceeded against to the situs of the accrual of cause of action wholly or in part. It is also clear that a trivial or insignificant part of the cause of action arising at a particular place would be not enough to confer writ jurisdiction; it is the cause of action mainly and substantially arising at a place which would be determinating action mainly and substantially arising at a place which would be determinating factor of territorial jurisdiction. So also it shall have to be kept in view who are the real persons or authorities sought to be proceeded against or against whom the writ to be issued by the Court WP(C) No.18634-35/2005 Page 14 of 41 would run. Joining to proforma or ancillary parties and certainly not the joining of unnecessary parties, would be relevant for the purposes of Article 226(1). 14. Reverting back to the case at hand, it is clear that the cause of action has wholly arisen in NOIDA within the State of U.P. The principal and substantial grievance of the petitioner-association is against the respondents No. 2 and 3 though incidentally, the respondent No.l may also be required to be bound by the writ. The reverse is not correct. The writ, if any, to be issued by the Court would not serve any purpose if issued against respondent No.l alone. In the matter of registration of the sale deed-cum-sub-lease deed merely because a document can be registered at Delhi by virtue of Section 30(2) of the Registration Act, territorial jurisdiction in the Courts at Delhi cannot be inferred. Moreover, the petitioner-association is already having some litigation before the Courts of U.P. And at one point of time the Delhi High Court had declined to entertain the petitioner-association's writ for want of territorial jurisdiction in Delhi." 6.3. In Oil & Natural Gas Commission vs. Utpal Kumar Basu and others, JT 1994 (5) SC 1, the action of ONGC rejecting the tender was challenged before the Calcutta High WP(C) No.18634-35/2005 Page 15 of 41 J' Court by way of a writ petition, which was entertained by the High Court. The Supreme Court held that the Calcutta High Court had no jurisdiction to deal with the matter. While setting aside the impugned decision, the Supreme Court observed as follows "8. From the facts pleaded in the writ petition, it is clear that NICCO invoked the jurisdiction of the Calcutta High Court on the plea that a part of the cause of action had arisen within its territorial jurisdiction. According to NICCO, it became aware of the contract proposed to be given by ONGC on reading the advertisement which appeared in the Times of India at Calcutta. In response thereto, it submitted its bid or tender from its Calcutta office and revised the rates subsequently. When it leamt that it was considered ineligible it sent representations, including fax messages, to EIL, ONGC, etc. at New Delhi, demanding justice. As stated earlier, the Steering Committee finally rejected the offer of NICCO and awarded the contract to CIMMCO at New Delhi on January 27, 1993. Therefore, broadly speaking, NITCO claims that a part of the cause of action arose within the jurisdiction of the advertisement in Calcutta, it WP(C) No.18634-35/2005 Page 16 of 41 submitted its bid or tender from Calcutta and made representations demanding justice from Calcutta on learning about the rejection of its offer. The advertisements itself mentioned that the tenders should be submitted at New Delhi and that a final decision whether or not to award the contract to the tenderer would be taken at New Delhi. Of course, the execution of the contract work was to be carried out at Hazira in Gujrat. Therefore, merely because it read the advertisement at Calcutta and submitted the offer from Calcutta and made representations from Calcutta would not, in our opinion, constitute facts forming an integral part of the cause of action. So also the mere fact that it sent fax messages from Calcutta and received a reply thereto at Calcutta would not constitute an integral part of the cause of action. Besides the fax message of January 15, 1993, can not be construed as conveying rejections of the offer as that fact occurred on January 27, 1993, We are, therefore, of the opinion that even if the averments in the writ petition are taken as true, it cannot be said that a part of the cause of action arose within the jurisdiction of the Calcutta High Court. 12 Notwithstanding the strong observations made by this Court in the aforesaid decisions and in the WP(C) No.18634-35/2005 Page 17 of 41 earlier decisions referred to therein, we are distressed that the High Court of Calcutta persists in exercising jurisdiction even in cases where no part of the cause of action arose within its territorial jurisdiction. It is indeed a great pity that one of the premier High Courts of the country should appear to have developed a tendency to assume jurisdiction on the sole ground that the petitioner before it resides in or carries on business from a registered office in the State of West Bengal. We feel all the more pained that notwithstanding the observations of this Court made time and again, some of the learned Judges continue to betray that tendency only recently while disposing of appeals arising out of SLP Nos. 10065-66 of 1993, Aligarh Muslim University & Anr. Vs. M/s.Vinny Engineering Enterprises (P) Ltd. & Anr., this Court observed: "We are surprised, not a little, that the High Court of Calcutta should have exercised jurisdiction in a case where it had absolutely no jurisdiction." In that case, the contract in question was executed at Aligarh, the construction work was to be carried out at Aligarh, the contracts provided that in the event of dispute the Aligarh Court alone will have jurisdiction, the arbitrator was appointed at Aligarh and was to function at Aligarh and yet merely WP(C) No.18634-35/2005 Page 18 of 41 because the respondent was a Calcutta based firm, it instituted proceedings in the Calcutta High Court and the High Court exercised jurisdiction where it had none whatsoever. It must be remembered that the image and prestige of a Court depends on how the members of that institution conduct themselves. If an impression gains ground that even in cases which fall outside the territorial jurisdiction of the Court, certain members of the Court would be willing to exercise jurisdiction on the plea that some event, however trivial and unconnected with the cause of action had occurred within the jurisdiction of the said Court, litigants would seek to abuse the process by carrying the cause before such members giving rise to avoidable suspicion. That would lower the dignity of the institution and put the entire system to ridicule. We are greatly pained to say so but if we do not strongly deprecate the growing tendency we will, we are afraid, be failing in our duty to the institution and the system of administration of justice. We do hope that we will not have another occasion to deal with such a situation" 6.4 Primacy has been given to the place where the cause of action has substantially arisen, as is evident from the WP(C) No.18634-35/2005 Page 19 of41 decision of the Supreme Court in South East Asia Shipping Co. Ltd versus Nav Bharat Enterprises Pvt. Ltd., (1996) 3 see 443. The admitted position was that performance of the obligations and liabilities under the contract was to be carried out in Bombay. The Apex Court found it wholly irrelevant that the subject Bank Guarantee had been executed at Delhi and transmitted for performance to Bombay and held that Delhi Courts did not possess jurisdiction to decide the dispute. 6.5 This question has been considered in detail by the Supreme Court in Union of India vs. Adani Exports Ltd., AIR 2002 SC 126. In its opinion, "each and every fact pleaded in the application does not ipso facto lead to the conclusion that those facts give rise to a cause of action within the Court's territorial jurisdiction unless those facts pleaded are such which have a nexus