* THE HON'BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE K.G.SHANKAR WRIT APPEAL Nos.1152 and 1187 of 2008 %Dated:17.08.2011 Between: M/s.Klen & Marshalls Manufacturers & Exporters Ltd. …Appellant and M/s.Eastern Power Distribution Company of Andhra Pradesh Limited, And others. …Respondents ! Counsel for the Appellant: Sri.B.Chandrasen Reddy ^Counsel for the Respondents: Ms.Jyothi Eswar Gogineni Sri O.Manohar Reddy <Gist: >Head Note: ?Citations: 1. (1977) 3 SCC 457 : AIR 1977 SC 1496 2. (1996) 6 SCC 22 : AIR 1996 SC 3515 3. (2000) 6 SCC 293 : AIR 2000 SC 2573 4. AIR 1965 SC 1740 5. (2001) 2 SCC 549 6. (2004) 3 SCC 553 THE HON'BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE K.G.SHANKAR WRIT APPEAL Nos.1152 and 1187 of 2008 Dated:17.08.2011 Between: M/s.Klen & Marshalls Manufacturers & Exporters Ltd. … Appel And M/s.Eastern Power Distribution Company of Andhra Pradesh Limited, And others. ... Responde THE HON'BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE K.G.SHANKAR WRIT APPEAL Nos.1152 and 1187 of 2008 COMMON JUDGMENT: (Per Hon’ble Sri Justice V.V.S.Rao) The appellant in both the appeals is a company specialized facilitation/execution of EPC contracts in the areas of power and infrastructu The Andhra Pradesh State Electricity Board (APSEB) invited tenders f contractors for installation, commissioning and maintenance of 11 KV 2 MV Capacitor Bank System Units (CBSU) at various substations in And Pradesh. The appellant was successful, and therefore, APSEB entered lease contract agreement with the appellant for certain number of CBSUs. A the implementation of electricity reforms, Eastern Power Distribution Comp Limited (EPDCL) – respondent in W.A.No.1152 of 2008, and the North Power Distribution Company Limited (NPDCL) – respondent in W.A.No.118 2008, stepped into the shoes of APSEB and succeeded to the rights, duties obligations under the contracts. To reduce the long story into a short one, appellant’s bills for monthly operation lease rentals were paid up to Aug 2005. From September 2005 to September 2006 the lease rental bills were paid. There was correspondence between the appellant and the concer Superintendent Engineer (SE) on one hand and between the latter and Chief General Manager (CGM) (Expenditure) on the other. Though initially SE conducted scrutiny of the appellant’s bills and sent the same to CGM necessary action, about four months thereafter the same SE informed appellant that the lease rental bills of the appellant are returned by the corpo Office, Visakhapatnam, stating that, “payment cannot be made as the lessor neither maintained the capacitor banks nor has attended for rectification defective capacitor banks during the period from 09/2005 to 10/2006 as per report of the Divisional Engineer, dated 10.11.2006”. Though not specific informed by written communication, the NPDCL also did not release the le rental bills. Being aggrieved by the denial of payment of lease rental bills, appellant filed W.P.No.6771 of 2007 against EPDCL and W.P.No.12436 2008 against NPDCL. In both of them, the appellant prayed for a wri mandamus declaring the denial of the payment as illegal and arbitrary and f consequential direction to the respondents to release the operational le rental payments to the appellant in the bills processed by the SE. Learned single Judge dismissed the writ petitions by a common o observing that there is dispute between the parties as to performance under contract; the contract is not covered by statutory terms; the post-thresh dispute is contractual in nature, and therefore, the appropriate remedy for appellant is to approach the civil Court. In these appeals the Counsel for the appellant submits that a receiving the lease rental bills for the period from September 2005 September 2006, the SE processed and after finding the claim to be cor forwarded the same to the CGM (Expenditure). But, the Corporate Of prevailed over the SE and made him to issue the letter raising all untena objections. He would urge that during the period, no complaint was m against the maintenance/rectification work carried out by the appellant, therefore, the turnaround is unjustified and arbitrary. The contract for commissioning and maintenance of CBSUs w APSEB, and later with EPDCL and NPDCL is non-statutory contract. As fo by the learned single Judge the contract between the parties does not prov for any payment schedules separately for installation, commissioning maintenance. Subject to the term of contract, for the breach of any terms by party, the other party to the contract may withhold the payments. When respondents denied the payments for the period from September 2005 September 2006 on the ground that the appellant did not maintain the CBS nor attended to rectification of defective Capacitor Banks, there is certain dispute regarding the discharge of mutual obligations. When there is a disp with regard to the performance of contract, it would not be proper to draw inference that the claim of the appellant has been admitted by the SE or for matter in the respondent’s Corporate Office. Further, though the appel sought for a declaration that the action of the respondents in denying paym of lease rental bills as illegal and arbitrary, ultimately it sought fo consequential direction to the respondents to make the payment. It is, in eff asking for a decree for payment of money. Such a writ petition, especially w there are disputed questions of fact with regard to discharge of mu obligations under the contract, would not lie. In Radhakrishna Agarwal v State of Bihar[1], dealing with the ques of maintainability of a writ petition challenging the breach of contract betw the citizen and the State, the Supreme Court held that a writ petition would lie as no questions of Article 14 of Constitution of India would arise in the c of breach of contract. The Supreme Court pointed the following three type breaches, where a writ petition would not lie in which event aggrieved party to approach the Civil Court for damages for breach. (i) Where a petitioner makes a grievance of breach of promise on the part of the State in cases where on assurance or promise made by the State he has acted to his prejudice and predicament, but the agreement is short of a contract within the meaning of Article 299 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; and (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. I n State of Uttar Pradesh v Bridge & Roof Company (Ind Ltd.,[2], the respondent was awarded a contract by the Government of U Pradesh for the work of improvement of a road. After completion of the w disputes arose about certain payments with regard to sales tax and p adjustment. The contractor approached the Commissioner of Sales Tax reduction and composition of tax in terms of Section 7-D of U.P. Trade Tax which appears to have been acceded. But the concerned Dep Commissioner ordered 1% tax deduction at source in view of Governm Order with regard to composition scheme, which was valid up to 31.3.19 Against this, the writ petition was filed. Allahabad High Court disposed of writ petition directing to deduct only 1% of the bill up to 31.3.1995. T Supreme Court held that when the contract provides for arbitration, a petition would not lie, and observed thus. … the contract between the parties is a contract in the realm of private law. It is not a statutory contract. It is governed by the provisions of the Contract Act or, maybe, also by certain provisions of the Sale of Goods Act. Any dispute relating to interpretation of the terms and conditions of such a contract cannot be agitated, and could not have been agitated, in a writ petition. That is a matter either for arbitration as provided by the contract or for the civil court, as the case may be. Whether any amount is due to the respondent from the appellant-Government under the contract and, if so, how much and the further question whether retention or refusal to pay any amount by the Government is justified, or not, are all matters which cannot be agitated in or adjudicated upon in a writ petition. Kerala State Electricity Board v Kurien E. Kalathil[3] deals w features that distinguish non-statutory contract from that of a statutory o Kerala State Electricity Board entered into agreement for construction of a da The agreement provided for payment of minimum wages fixed under Minimum Wages Act, 1948. The contractor claimed compliance with the s condition. The Board stopped payment insofar as revised (escalated) minim wages from January 1985. The contractor’s request to State Government w negatived ordering recovery. It was challenged before Kerala High C seeking a direction to Board for payment of the amounts towards lab charges with interest. The same was allowed which was assailed before Supreme Court inter alia on the ground that such dispute relating interpretation of clause in a contract and implementation of such clause can be made subject matter of writ petition and that remedy of aggrieved person in approaching the Civil Court. The argument found acceptance by the C and the Supreme Court held as follows. The interpretation and implementation of a clause in a contract cannot be the subject matter of a writ petition. Whether the contract envisages actual payment or not is a question of construction of contract. If a term of a contract is violated, ordinarily the remedy is not the writ petition under Article 226. … … A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. … … A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a petition under Article 226 of the Constitution of India. That is a matter for adjudication by a civil court or in arbitration if provided for in the contract. Whether any amount is due and if so, how much and refusal of the appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have relegated to other remedies. (emphasis supplied) If a person seeks payment of money from a private person, a suit recovery of money would lie. If a person seeks payment of money towa refund of excess tax or charges for the work done or service given etc., f State or public authority, Writ Petition is not a proper remedy. The exercis power of judicial review is subject to many limitations. If the case invo serious disputed questions of fact, ordinarily, the Court would refrain f adjudicating such issues. All claims for money invariably involve exercise adjudication of questions of fact. Therefore, Writ Petition for refund of mone for that matter damages for breach of contract is ordinarily not maintainable. petition for damages relevant issues would be whether the respondent is g of dereliction of duty or guilty of negligence, whether the defence taken by respondent like good faith, diligence etc., is sufficient to discharge respond etc., are all matters involving production of acceptable evidence. In all situati and circumstances, the affidavit evidence would not be sufficient to arrive definite conclusion even on balancing of probabilities. Therefore, over a pe of time, the Courts, by and large, have taken the view that claim for money way of writ petition is ordinarily not maintainable. In Suganmal v. State of Madhya Pradesh[4] a Constitution Benc the Supreme Court considered the question whether a petition under Article of the Constitution of India for refund of money collected by the State as tax maintainable. In the said case, the appellant was proprietor of Bhandari and Steel Company, which had its foundry in Indore carrying on busines Mechanical Engineers, Iron, Brass and Malleable Iron founders and Re-rol in Steel. Though it was not carrying on any business of cotton mill, it was ca upon to pay industrial tax under Industrial Tax Act imposed on cotton m During the years 1941 to 1943, the authorities assessed the industrial payable by the appellant, and the amount was paid. The appeals filed by appellant were decided in their favour holding that the appellant is not liabl pay industrial tax. The attempts of the appellant for refund of amount from State Government proved unsuccessful and therefore a Writ Petition was f before the High Court of Madhya Pradesh. The High Court dismissed the Petition holding that Writ of Mandamus could not be issued for the purpos refund of tax wrongly realised by the State. The Supreme Court affirmed view and held that “normally, petitions solely praying for refund of mo against State are not maintainable and that the aggrieved party has right to to Civil Court where the State can raise all the defenses which cannot be rai in Writ Petition”. The relevant portion from the judgment reads as under. On the first point, we are of opinion that though the High Courts have power to pass any appropriate order in the exercise of the powers conferred under Art. 226 of the Constitution, such a petition solely praying for the issue of a writ of mandamus directing the State to refund the money is not ordinarily maintainable for the simple reason that a claim for such a refund can always be made in a suit against the authority, which had illegally collected the money as a tax. We have been referred to cases in which orders had been issued directing the State to refund taxes illegally collected, but all such cases had been those in which the petitions challenged the validity of the assessment and for consequential relief for the return of the tax illegally collected. We have not been referred to any case in which the Courts were moved by a petition under Art. 226 simply for the purpose of obtaining refund of money due from the State on account of its having made illegal exactions. We do not consider it proper to extend the principle justifying the consequential order directing the refund of amounts illegally realised, when the order under which the amounts had been collected has been set aside, to cases in which only orders for the refund of money are sought. The parties had the right to question the illegal assessment orders on the ground of their illegality or unconstitutionality and therefore, could take action under Art. 226 for the protection of their fundamental right, and the Courts, on setting aside the assessment orders, exercised their jurisdiction in proper circumstances to order the consequential relief for the refund of the tax illegally realised. We do not find any good reason to extend this principle, and therefore, hold that no petition for the issue of a writ of mandamus will be normally entertained for the purpose of merely ordering a refund of money to the return of which the petitioner claims a right. U.P. Pollution Control Board v. Kanoria Industrial Ltd.,[5] is a a case which involved the claim of respondent industry for refund of amo paid by them as water cess under the provisions of Water (Prevention Control of Pollution) Cess Act, 1977. The High Court of Allahabad directed U.P. Pollution Control Board to refund the sums realised from the responden water cess. Before the Supreme Court it was contended that a Mandamus co not be given for refund of the amount. After referring to various decisions on point, including the decision in Suganmal, the apex Court observed as follow ..…It is one thing to say that the High Court has no power under Article 226 of the Constitution to issue a writ of mandamus for making refund of the money illegally collected. It is yet another thing to say that such power can be exercised sparingly depending on facts and circumstances of each case. For instance, in the case on hand where facts are not in dispute, collection of money as cess was itself without the authority of law; no case of undue enrichment was made out and the amount of cess was paid under protest; the writ petitions were filed within a reasonable time from the date of the declaration that the law under which tax/cess was collected was unconstitutional. There is no good reason to deny a relief of refund to the citizens in such cases on the principles of public interest and equity in the light of the cases cited above. However, it must not be understood that in all cases where collection of cess, levy or tax is held to be unconstitutional or invalid, the refund should necessarily follow. We wish to add that even in cases where collection of cess, levy of tax is held to be unconstitutional or invalid, refund is not an automatic consequence but may be refused on several grounds depending on facts and circumstances of a given case. I n A.B.L.International Ltd. v. Export Credit Guaran Corporation of India Ltd.,[6] (supra), the Supreme Court again conside similar question and laid down as below. From the above discussion of ours, the 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 fact 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. 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 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. 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. In view of the principles laid down by the Supreme Court thoug appropriate cases it is always permissible for this Court to entertain claim refund of money against State or instrumentality of the State, the Court will normally exercise its prerogative jurisdiction to the exclusion of the o available remedies unless such action of the State is arbitrary unreasonable so as to violate Article 14 of the Constitution of India reasonableness of the State action itself is a disputed question requi elaborate evidence, the Court should refrain from entertaining Writ Petition money claim. In this case, the lease rental bills were submitted by the SE to Corporate Office for necessary action. They were returned with two objectio namely, the appellant did not maintain CBSUs, and secondly, it has attended to rectification of defective capacitor banks during the period f September 2005 to October 2006. If this is the alleged reason for withhold the bills, the question of breach of contract by the appellant would arise. It matter of evidence, and based on the affidavits, the issue cannot be decid Therefore, we do not find any reason to interfere with the order of the lear single Judge, and the writ appeals are liable to be dismissed. We, howe observe that, if so advised, it is always open to the appellant to seek remed a civil Court. The Writ Appeals, with the above observations, are accordin dismissed. ____________ (V.V.S.RAO ________________ (K.G.SHANKAR 17.08.2011 vs [1] (1977) 3 SCC 457 : AIR 1977 SC 1496 [2] (1996) 6 SCC 22 : AIR 1996 SC 3515 [3] (2000) 6 SCC 293 : AIR 2000 SC 2573 [4] AIR 1965 SC 1740 [5] (2001) 2 SCC 549 [6] (2004) 3 SCC 553