Case: Food Corporation of India &amp; Another Vs. M/s. SEIL Ltd. &amp; Others

by the respondents many many years back, save and except under the terms of binding contract. 14. We have noticed hereinbefore that the High Court had divided the cases in two categories. In regard to the supplies made by the respondents to the Central Government and/or its agencies wherewith appellants had no concern, it could not have denied payment on the pretext of shortage or quality of the sugar supplied, particularly, when the recipient did not raise such a question. 15. The Central Government, issued a letter dated 17th November, 1972 on which reliance has been placed by the appellant itself before the High Court; clause (vii) whereof reads as under: On receipt of dispatch instructions, the District Manager at dispatching and will arrange full payment including excise duty to the mills for road movement. As regards, movement by rail full payment may be made in two installments; first being @ Rs.15/- per quintal. After making initial payment inspection of the stocks should be arranged and mills should be asked and perused to place indents for wagons immediately. Balance amount will be paid to the Mills as soon as wagons are placed. To save time lag, cheques/demand drafts should be kept ready and handed over the mills as soon as wagons are made available, as the mills may hesitate loading wagons unless full payment is made particularly when the consignees will be FCI and ownership of the Cargo will be changed as soon as stocks are loaded. Excise duty will also be paid along with the final payment for stocks RRs will be freight to pay and in favour of FCI as consignee. Payment shall be made through cheques and in case of any objection from the mill regarding acceptance of the cheques, payments may be made either by demand draft or cheques certified as good for payment. Funds shall be arranged by the District Managers directly from the Head Office as is being done in the case of food grain purchase. Posting of additional staff at the mill point is under consideration and after decision is taken follow up action should be taken by the Regional Managers. The staff at the mill would be responsible to undertake inspection of quality, check weighment, indent of wagons and look to other general arrangements about transport and dispatch. These transport charges will be incorporated by the mills in the bills and will be paid by FCI. Wagons will be booked against clear RRs in the name of receiving District Managers and would be sent to the letter promptly. Stocks by rail shall move against clear RRs and it shall therefore be the responsibility of the receiving District Managers to account for the weight of sugar properly. In case of any shortage/damages of sugar in transit, the claims for the same should be lodged promptly with the railways, in accordance with the standing instructions on the subject. 16. Jurisdiction of the High Court to entertain a writ application involving contractual matter was considered by a Bench of this Court in ABL International Ltd. & Anr. v. Export Credit Guarantee Corporation of India Ltd. & Ors. [(2004) 3 SCC553] wherein upon referring to a large number of decisions, it was held: 23. It is clear from the above observations of this Court, once the State or an instrumentality of the State is a party of the contract, it has an obligation in law to act fairly, justly and reasonably which is the requirement of Article 14 of the Constitution of India. Therefore, if by the impugned repudiation of the claim of the appellants the first respondent as an instrumentality of the State has acted in contravention of the above said requirement of Article 14, then we have no hesitation in holding that a writ court can issue suitable directions to set right the arbitrary actions of the first respondent. 17. Reliance placed by Mr. Sharan on M/s. Burmah Construction Company v. The State of Orissa & Ors. [AIR 1962 SC 1320 ] is not apposite. Claim made therein was a pure money claim. It was in that situation observed that the High Court normally does not entertain a petition under Article 226 of the Constitution to enforce a civil liability arising out of a breach of contract to pay an amount of money due to the claimant. 18. Article 14 of the Constitution of India has received a liberal interpretation over the years. Its scope has also been expanded by creative interpretation of the court. The law has developed in this field to a great extent. In this case, no disputed question of fact is involved. The High Court, in an appropriate case, may grant such relief to which the writ petitioner would be entitled to in law as well as in equity. We do not, thus, find any substance in the contention of Mr. Sharan that while exercising its review jurisdiction, no interest on the principal sum could have been directed to be granted by the High Court. A writ court exercises its power of Review under Article 226 of the Constitution of India itself. While exercising the said jurisdiction, it not only acts as a court of law but also as a court of equity. A clear error or omission on the part of the court to consider a justifiable claim on its part would be subject to review; amongst others on the principle of actus curiae neminem gravabit (An act of the courts shall prejudice none). We appreciate the manner in which the learned Judge accepted his mistake and granted relief to the respondents. 19. We, however, although agree with the opinion of the Division Bench of the High Court on the legal principle in regard to payment of interest, as has been enunciated by it, having regard to the fact that the respondents did not prefer any appeal, are of the opinion that increase in the rate of interest, as has been directed by the Division Bench, cannot be upheld.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]18. Article 14 of the Constitution of India has received a liberal interpretation over the years. Its scope has also been expanded by creative interpretation of the court. The law has developed in this field to a great extent. In this case, no disputed question of fact is involved. The High Court, in an appropriate case, may grant such relief to which the writ petitioner would be entitled to in law as well as in equity. We do not, thus, find any substance in the contention of Mr. Sharan that while exercising its review jurisdiction, no interest on the principal sum could have been directed to be granted by the High Court. A writ court exercises its power of Review under Article 226 of the Constitution of India itself. While exercising the said jurisdiction, it not only acts as a court of law but also as a court of equity. A clear error or omission on the part of the court to consider a justifiable claim on its part would be subject to review; amongst others on the principle of actus curiae neminem gravabit (An act of the courts shall prejudice none). We appreciate the manner in which the learned Judge accepted his mistake and granted relief to the respondents19. We, however, although agree with the opinion of the Division Bench of the High Court on the legal principle in regard to payment of interest, as has been enunciated by it, having regard to the fact that the respondents did not prefer any appeal, are of the opinion that increase in the rate of interest, as has been directed by the Division Bench, cannot be upheld.