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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6086 OF 2015

(@ SLP(C) NO. 19380 OF 2014)

State of Kerala & Ors. ... Appellants

Versus

M.K. Jose      ... Respondent

J U D G M E N T

Dipak Misra, J.

The  present  appeal,  by  special  leave,  assails  the

correctness of the judgment dated 24.02.2014 passed by the

High Court of Kerala at Ernakulam in W.A. No. 1912/2013

whereby the Appellate Bench has reversed the decision of

the learned Single Judge rendered in W.P.(C) No. 22541 of

2013 whereunder he had declined to interfere with the order

of  the  Secretary,  Public  Works  Department,  Road  and

Projects of the State terminating the contract awarded to the

respondent and forfeiting the security deposit placed by the

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contractor for the work to the state and further stating that

the work had been put an end to at the cost and risk of the

contractor.  

2. Exposition of facts with essential details is imperative

to appreciate the controversy in proper perspective and also

to consider the manner in which the Appellate Bench has

exercised  the  writ  jurisdiction  under  Article  226  of  the

Constitution in respect of a matter relating to termination of

contract.  The respondent was awarded the work, namely,

“Stimulus  package-improvements  to

Kannavam-Idumba-Trikadaripoyil  Road  Km.  0/000  to

9/100 in Kannur  District”  and accordingly  an agreement

was executed between the parties on 18.12.2010. The site

for  the  work  was  handed  over  to  the  respondent  on

27.12.2010  and  the  work  was  to  be  completed  within  a

period of 12 months.  Thus, the work, as requisite, under

the terms of the contract was to be completed in all respects

as on 26.12.2011.  The respondent could not complete the

work in time and on a request being made, time was initially

extended up to 30.06.2012 and thereafter further extension

was granted upto 31.03.2013.   

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3. As is perceptible from the order of termination of the

contract, despite issue of several notices and instructions,

the contractor failed to complete the work even during the

extended period.  The Executive Engineer of the Department

issued a memorandum on 14.02.2013 stopping the work.

As there was some deviation of work, the revised estimate

was required to be done but the same was not sanctioned

by  the  Government.   At  that  juncture,  the  respondent

preferred  W.P.(C)  No.  5672  of  2012  seeking  appropriate

direction to the Government to pass orders sanctioning the

revised  estimate.   The  High  Court  disposed  of  the  writ

petition directing the Principal Secretary to take a decision

on  the  proposal  of  revised  estimate.   Thereafter,  the

respondent filed a contempt petition which was eventually

dropped.   

4. As  the  factual  matrix  would  further  unfurl,  the

respondent submitted a representation to the Government

and thereafter filed W.P.(C) No. 23087 of 2012.  The High

Court directed the Principal Secretary, PWD to consider and

pass orders on his representation.  It is apt to note here that

the  respondent  had filed  series  of  writ  petitions,  namely,

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W.P.(C) No. 26075 of 2012 and W.P.(C) No. 5690 of 2013

and the High Court vide order dated 08.04.2013 in W.P.(C)

No.  5690  of  2013,  directed  the  Secretary,  PWD  to  pass

appropriate orders in accordance with law.  Eventually, as

has been stated earlier, the contract was terminated.   

5. The said order of  termination was assailed in WP(C)

No.  22541 of  2013.  The learned Single Judge noted the

facts and took note of prayer no. (c) which was for issue of a

writ of mandamus or any other appropriate writ, order or

direction  directing  the  respondents  to  take  steps  for

measurement  of  the  work already completed by  him and

making  corresponding  entries  in  the  measurement  book.

The said prayer was acceded to by the counsel for the State

of Kerala and accordingly the learned Single Judge directed

measurement  of  the  work  to  be  completed  effecting

necessary  entries  in  the  measurement  book  before

finalization of the tender proceedings, if any, in respect of

balance work.  The learned Single Judge had also directed

that the measurements should take place after notice to the

contractor.     

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6. The aforesaid order was assailed in the writ  appeal.

When  the  appeal  was  listed  for  admission,  the  Appellate

Bench, on 17.12.2013, passed the following order:-

“We heard the learned counsel for the appellant at length.  Ext. P15 order shows that more than 50% of the work remains to be completed.  The learned  counsel  for  the  appellant  referred  to paragraph 10 of the counter affidavit filed by the first respondent dated 15.3.2013 in W.P.(C) No. 5690 of 2013 (another writ petition filed by the appellant) wherein it is stated that “over all 70% of  total  works  completed  so  far”.   The  learned counsel  for the appellant submitted that nearly 90% of the work was over and the work could not be  completed  within  the  extended  period  since the Department did not fulfil certain mandatory requirements in order to complete the work and since a stop memo was issued even before the expiration of the extended period.   

2. Learned counsel for the appellant submitted that  the  appellant  is  prepared  to  take  out  a commission to substantiate  the contention that 90% of the work is over.   Learned Government pleader  sought  for  a  short  time  to  get instructions.   Since  the  matter  is  urgent  and since  the  courts  are  going  to  be  closed  on 20.12.2013, we are inclined to grant only a day’s time to get instructions on the prayer made by the  appellant  that  a  commissioner  may  be appointed.”

7. On  the  adjourned  date,  the  counsel  for  the  State

submitted  that  the  respondent  had  no  objection  for

appointment of Commissioner.  On the aforesaid basis, the  

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Division  Bench  appointed  two  Advocates  as  joint

commissioners to inspect the site and to submit the report

in respect of the disputed questions mentioned in the order

dated  17.12.2013.   Thereafter,  the  Court  passed  the

following order:-

“The  Commissioners  would  be  free  to  seek  the help of a competent Engineer for the purpose of enabling them to prepare a report which would throw light on the disputed question involved in the case.  The appellant as well as respondents would  provide  all  assistance  to  the Commissioners for execution of their work.  The Commissioners would be entitled to call for any record from the appellant as well as respondents 3 and 4 for  the purpose of  executing the work entrusted to them.”

8. The  Commission  appointed  by  the  Appellate  Bench

took assistance of one Retired Assistant Executive Engineer,

PWD who submitted a report to the commissioners, which

was annexed to the Commission’s report.  We need not refer

to the report which has been reproduced by the impugned

order.   However,  the  Engineer  who  assisted  the

Commission,  in  his  report  under  the  heading  ‘Details  of

work done’, has stated thus:-

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“Anyhow the contractor has executed a minimum amount  of  work  so  far  up  to  the  commission, inspection date of  3.1.2014 of Rs.2,27,90,383/- which  is  72.24%  of  the  revised  estimate  and 97.09%  of  the  original  work  (Estimate  PAC). There are some minor damages in the completed portion of BT surface and white topped portion (concrete road) and the general condition of the whole  work  executed  by  the  contractor  is satisfactory.   A detailed item wise statement  is prepared and appended herewith for perusal as Annexure A.”

9. The Appellate Bench on the basis of  the said report

came to hold that the order of termination was founded on

erroneous facts inasmuch as the competent authority had

opined  that  more  than  50% of  the  work  remained  to  be

done.   The  Division  Bench  opining  that  as  there  was  a

factual  defect,  which  was  evident  from the  commission’s

report, the order of termination of contract was liable to be

quashed and accordingly axed the same.  After quashing the

same, the High Court directed the Superintending Engineer,

PWD, (Roads and Bridges) to consider and dispose of the

matter  afresh  after  affording  an  opportunity  to  the

contractor  of  being  heard.   It  also  directed  that  the

Commission’s  report  and  the  Engineer’s  report  and  the

accounts  shall  be  produced  by  the  contractor  before  the

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competent authority who shall take the same into account

before taking final decision in the matter.  After so directing,

the High Court eventually ruled that:

“Since Exhibit P15 order is passed on incorrect data  and  since  that  data  was  found  to  be incorrect by appointing Joint Commissioners, we are of the view that the Government should bear the expenses of the Commissioners and expenses of the Engineer in submitting the reports.  Before conducting a final hearing, a sum of Rs.40,000/- shall  be  paid  by  the  first  respondent  to  the appellant/writ  petitioner.   Taking  into  account the work done by the Engineer, we think that an additional remuneration of Rs.5,000/- should be paid  to  the  Engineer.   The  appellant/writ petitioner  shall  pay  the  said  amount  of Rs.5,000/- to the Engineer within 15 days and proof thereof shall be produced by the appellant before this Court.”

10. We  have  heard  Mr.  Ramesh  Babu  M.R.,  learned

counsel for the appellants and Mr. K. Parmeshwar, learned

counsel for the respondent.  

11. The  thrust  of  the  matter  is  whether  the  Appellate

Bench in intra-court appeal arising from a petition under

Article 226 of the Constitution, should have carried out the

exercise that it has done and eventually quashed the order

terminating  the  contract  by  the  competent  authority  of  a

Department on the ground that it was passed on erroneous

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facts,  for  the  respondent  contractor,  as  per  the

Commission’s report, had done higher percentage of work.

We would not like to comment anything on the order passed

by the learned Single Judge as that was not challenged by

the State before the Appellate Court in appeal.  The learned

Single Judge had directed measurement to be carried out

prior  to  floating  of  tender  for  the  balance  work.   That

direction, as is evident, has been accepted by the State.

12. As the factual narration would reveal, the respondent

has been invoking the jurisdiction of the High Court under

Article  226  of  the  Constitution  on  various  occasions

challenging every action which pertain to extension of time,

denial  of  revised  estimate  by  the  State  Government  and

many other facets of that nature and the High Court, we

must  say,  has  been  generously  passing  orders  for

consideration  by  the  appropriate  authority,  for  grant  of

opportunity of being heard to the contractor and to consider

his  representation  in  accordance  with  law.   This  kind  of

orders in a contractual matter, in our considered view, is

ill-conceived.   They not  only convert  the controversy to a

disturbing labyrinth, but encourage frivolous litigation.  The

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competent authority might have mentioned that more than

50% work remained to be done but that should not have

prompted  the  Appellate  Bench  hearing  the  intra-court

appeal  to  appoint  a  Commission  of  two  Advocates  and

granting  them  liberty  to  take  assistance  of  a  competent

Engineer.  As the report would show, the Commission of two

Advocates  have  taken  assistance  of  a  retired  Assistant

Executive  Engineer  and  submitted  the  report.   Though,

learned counsel for the State had not objected to the same,

yet we really fail to fathom how a writ jurisdiction can be

extended to cause a roving enquiry through a Commission

and rely on the facts collected without granting opportunity

to  the  State  to  file  objections  to  the  same  and  in  the

ultimate  eventuate,  cancel  the  order  of  termination  of

contract.   What precisely was the quantum of work done

and whether there had been a breach by the owner or the

contractor, are required to be gone into by the appropriate

legal forum.

13. A  writ  court  should  ordinarily  not  entertain  a  writ

petition, if there is a breach of contract involving disputed

questions of  fact.  The present case clearly indicates that

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the  factual  disputes  are  involved.   In  State of  Bihar v.

Jain Plastics  and Chemicals  Ltd.1,  a  two-Judge Bench

reiterating the exercise of  power under Article  226 of  the

Constitution  in  respect  of  enforcement  of  contractual

obligations has stated:-

“It  is  to  be  reiterated  that  writ  petition  under Article  226  is  not  the  proper  proceedings  for adjudicating such disputes. Under the law, it was open to the respondent to approach the court of competent  jurisdiction  for  appropriate  relief  for breach of contract. It is settled law that when an alternative and equally efficacious remedy is open to the litigant, he should be required to pursue that remedy and not invoke the writ jurisdiction of  the  High  Court.  Equally,  the  existence  of alternative remedy does not affect the jurisdiction of  the  court  to  issue  writ,  but  ordinarily  that would be a good ground in refusing to exercise the discretion under Article 226.”

In the said case, it has been further observed:-

“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 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

1  (2002) 1 SCC 216

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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.”

14. In National Highways Authority of India v. Ganga

Enterprises2,  the  respondent  therein  had  filed  a  writ

petition  before  the  High Court  for  refund of  the  amount.

The High Court posed two questions, namely,  (a) whether

the forfeiture of security deposit is without authority of law

and without any binding contract between the parties and

also  contrary  to  Section  5  of  the  Contract  Act;  and  (b)

whether the writ petition is maintainable  in a claim arising

out of breach of contract.  While dealing with the said issue,

this Court opined that:-

“It  is  settled  law  that  disputes  relating  to contracts cannot be agitated under Article 226 of the Constitution of India. It has been so held in the  cases  of  Kerala  SEB v.  Kurien  E.  Kalathil3, State of U.P. v. Bridge & Roof Co. (India) Ltd.4 and Bareilly Development Authority v.  Ajai Pal Singh5. This is settled law. The dispute in this case was regarding  the  terms  of  offer.  They  were  thus contractual  disputes in respect  of  which a writ court  was  not  the  proper  forum.  Mr  Dave, however,  relied  upon  the  cases  of  Verigamto Naveen v.  Govt.  of  A.P.6 and  Harminder  Singh

2  (2003) 7 SCC 410 3  (2000) 6 SCC 293 4  (1996) 6 SCC 22 5  (1989) 2 SCC 116 6  (2001) 8 SCC 344

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Arora v.  Union  of  India7.  These,  however,  are cases  where  the  writ  court  was  enforcing  a statutory right or  duty.  These cases do not  lay down that a writ court can interfere in a matter of contract  only.  Thus  on  the  ground  of maintainability  the  petition  should  have  been dismissed”.

15. Having  referred  to  the  aforesaid  decisions,  it  is

obligatory on our part to refer to two other authorities of

this  Court  where  it  has  been  opined  that  under  what

circumstances a disputed question of fact can be gone into.

In Gunwant Kaur v. Municipal Committee, Bhatinda8, it

has been held thus:-

“14. The High Court observed that they will not determine  disputed  question  of  fact  in  a  writ petition. But what facts were in dispute and what were admitted could only be determined after an affidavit-in-reply was filed by the State. The High Court, however, proceeded to dismiss the petition in limine.  The High Court is not deprived of its jurisdiction to entertain a petition under Article 226  merely  because  in  considering  the petitioner’s  right to relief  questions of  fact may fall to be determined. In a petition under Article 226 the High Court has jurisdiction to try issues both of fact and law.  Exercise of the jurisdiction is,  it  is  true,  discretionary,  but  the  discretion must be exercised on sound judicial  principles. When the  petition  raises questions of  fact  of  a complex  nature,  which  may  for  their determination require oral evidence to be taken, and on that account the High Court is of the view

7  (1986) 3 SCC 247 8  (1969) 3 SCC 769

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that the dispute may not appropriately be tried in a writ petition, the High Court may decline to try a petition.  Rejection of  a petition in limine will normally be justified, where the High Court is of the view that the petition is frivolous or because of the nature of the claim made dispute sought to be agitated, or that the petition against the party against  whom  relief  is  claimed  is  not maintainable or that the dispute raised thereby is such that it would be inappropriate to try it in the writ jurisdiction, or for analogous reasons.

15. From the averments made in the petition filed by the  appellants  it  is  clear  that  in  proof  of  a large number of allegations the appellants relied upon documentary evidence and the only matter in respect of which conflict of facts may possibly arise  related  to  the  due  publication  of  the notification under Section 4 by the Collector.

16.  In  the  present  case,  in  our  judgment,  the High Court  was  not  justified  in  dismissing  the petition on the ground that it will not determine disputed  question  of  fact.  The  High  Court  has jurisdiction to determine questions of fact, even if they  are  in  dispute  and  the  present,  in  our judgment, is a case in which in the interests of both  the  parties  the  High  Court  should  have entertained  the  petition  and  called  for  an affidavit-in-reply  from  the  respondents,  and should have proceeded to try the petition instead of relegating the appellants to a separate suit.”

[Emphasis added]

16. In  ABL  International  Ltd.  v.  Export  Credit

Guarantee Corpn. of India Ltd.9, a two-Judge Bench after

9  (2004) 3 SCC 553

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referring  to  various  judgments  as  well  as  the

pronouncement  in  Gunwant  Kaur (supra)  and  Century

Spg.  And  Mfg.  Co.  Ltd.  v.  Ulhasnagar  Municipal

Council10, has held thus:-

“19. Therefore,  it  is  clear  from  the  above enunciation of law that merely because one of the parties to the litigation raises a dispute in regard to  the  facts  of  the  case,  the  court  entertaining such  petition  under  Article  226  of  the Constitution is not always bound to relegate the parties to a suit. In the above case of  Gunwant Kaur this  Court  even  went  to  the  extent  of holding that in a writ petition, if the facts require, even  oral  evidence  can  be  taken.  This  clearly shows that in an appropriate case, the writ court has the 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.

xxxxx xxxxx xxxxx

27. 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

10  (1970) 1 SCC 582

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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.

While laying down the principle, the Court sounded a

word of caution as under:-

“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.  (See  Whirlpool  Corpn. v. Registrar of Trade Marks11.) 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”.

17. It is appropriate to state here that in the said case, the

Court granted the relief as the facts were absolutely clear

from the documentary evidence brought which pertain to

11  (1998) 8 SCC 1

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interpretation of certain clauses of contract of insurance.  In

that context, the Court opined:-

“....  The terms of  the insurance contract  which were agreed between the parties  were after  the terms of the contract between the exporter and the importer  were executed which included the addendum, therefore, without hesitation we must proceed  on  the  basis  that  the  first  respondent issued  the  insurance  policy  knowing  very  well that there was more than one mode of payment of consideration and it had insured failure of all the modes  of  payment  of  consideration.  From  the correspondence as well as from the terms of the policy,  it  is  noticed  that  existence  of  only  two conditions  has  been  made  as  a  condition precedent  for  making  the  first  respondent Corporation  liable  to  pay  for  the  insured  risk, that is: (i) there should be a default on the part of the  Kazak  Corporation  to  pay  for  the  goods received; and (ii) there should be a failure on the part of the Kazakhstan Government to fulfil their guarantee”.

And it eventually held:-

“.....  We  have  come to  the  conclusion  that  the amended clause 6 of the agreement between the exporter and the importer on the face of it does not  give  room  for  a  second  or  another construction  than  the  one  already  accepted  by us. We have also noted that reliance placed on sub-clause  (d)  of  the  proviso  to  the  insurance contract by the Appellate Bench is also misplaced which  is  clear  from  the  language  of  the  said clause itself. Therefore, in our opinion, it does not require  any  external  aid,  much  less  any  oral evidence  to  interpret  the  above  clause.  Merely because  the  first  respondent  wants  to  dispute this  fact,  in our opinion,  it  does not  become a

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disputed  fact.  If  such  objection  as  to  disputed questions  or  interpretations  is  raised  in  a  writ petition, in our opinion, the courts can very well go into the same and decide that objection if facts permit the same as in this case”.

18. In this regard, a reference to Noble Resources Ltd. v.

State  of  Orissa  and  Another12 would  be  seemly.   The

two-Judge  Bench  referred  to  the  ABL  International

(supra),  Dwarkadas  Marfatia  &  Sons  v.  Board  of

Trustees,  Port  of  Bombay13,  Mahabir  Auto  Stores  v.

Indian  Oil  Corp.14 and  Jamshed  Hormusji  Wadia  v.

Board of Trustees, Port of Mumbai15 and opined thus:-

“Although  the  scope  of  judicial  review  or  the development of law in this field has been noticed hereinbefore  particularly  in  the  light  of  the decision of  this  Court  in  ABL International  Ltd. each case, however, must be decided on its own facts.  Public  interest  as  noticed  hereinbefore, may be one of the factors to exercise the power of judicial  review.  In  a  case  where  a  public  law element  is  involved,  judicial  review  may  be permissible. (See Binny Ltd. v. V. Sadasivan16 and G.B. Mahajan v. Jalgaon Municipal Council17.)”

19. Thereafter,  the  court  proceeded  to  analyse  the  facts

and came to hold that certain serious disputed questions of

12  (2006) 10 SCC 236 13  (1989) 3 SCC 293  14  (1990) 3 SCC 752 15  (2004) 3 SCC 214 16  (2005) 6 SCC 657 17  (1991) 3 SCC 91

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facts  have  arisen  for  determination  and  such  disputes

ordinarily  could  not  have  been  entertained  by  the  High

Court  in  exercise  of  its  power  of  judicial  review  and

ultimately the appeal was dismissed.  

20. We  have  referred  to  the  aforesaid  authorities  to

highlight  under  what  circumstances  in  respect  of

contractual claim or challenge to violation of contract can be

entertained by a writ court.  It depends upon facts of each

case.   The  issue  that  had  arisen  in  ABL  International

(supra) was that an instrumentality of a State was placing a

different  construction  on  the  clauses  of  the  contract  of

insurance  and  the  insured  was  interpreting  the  contract

differently.   The  Court  thought  it  apt  merely  because

something is disputed by the insurer, it should not enter

into the realm of disputed questions of fact.  In fact, there

was  no  disputed  question  of  fact,  but  it  required

interpretation  of  the  terms  of  the  contract  of  insurance.

Similarly, if the materials that come on record from which it

is clearly evincible, the writ court may exercise the power of

judicial review but, a pregnant one, in the case at hand, the

High  Court  has  appointed  a  Commission  to  collect  the

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evidence, accepted the same without calling for objections

from the respondent and quashed the order of termination

of contract.  The procedure adopted by the High Court, if we

permit ourselves to say so, is quite unknown to exercise of

powers under Article 226 in a contractual matter.  We can

well  appreciate  a  Committee  being  appointed  in  a  Public

Interest Litigation to assist the Court or to find out certain

facts.   Such an exercise is meant for  public good and in

public interest.  For example, when an issue arises whether

in a particular State there are toilets for school children and

there is an assertion by the State that there are good toilets,

definitely the Court  can appoint a Committee to verify the

same.  It is because the lis is not adversarial in nature.  The

same principle cannot be taken recourse to in respect of a

contractual controversy.  It is also surprising that the High

Court has been entertaining series of writ petitions at the

instance of the respondent, which is nothing but abuse of

the process of extraordinary jurisdiction of the High Court.

The  Appellate  Bench  should  have  applied  more  restraint

and proceeded in accordance with law instead of making a

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roving enquiry.   Such a step is  impermissible  and by no

stretch of imagination subserves any public interest.

21. Consequently, the appeal is allowed and the judgment

and  order  passed  by  the  Appellate  Bench  is  set  aside.

However,  in  the  facts  and circumstances  of  the  case,  we

refrain from imposing costs.

.............................J. [Dipak Misra]

..........................., J. [Prafulla C. Pant]

New Delhi August 14, 2015

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