Holding

A writ petition seeking relief for breach of a non‑statutory contract with disputed facts is not maintainable under Article 226; the High Court’s order is set aside.

Summary

The Orissa Agro Industries Corporation entered into a non‑statutory contract with Sharati Industries to lift unserviceable machinery and scrap. A dispute arose over the value of the items actually lifted, with the respondent claiming breach of contract and seeking a refund of Rs 8.5 lakhs plus interest. The Orissa High Court, despite noting that factual disputes existed, entertained the writ petition under Article 226 and ordered the corporation to pay the amount. The Supreme Court held that a writ petition cannot be used to enforce a contractual claim where the contract is purely private and factual issues are in dispute, and that the appropriate remedy lies in a civil suit. Consequently, the High Court’s order was set aside and the appeal was allowed, with no order as to costs.

Issues considered

Whether a writ petition under Article 226 is maintainable for enforcement of a non‑statutory contract involving factual disputes.
Whether the High Court can adjudicate disputed facts in a writ petition.
Whether the existence of an alternative civil remedy bars the exercise of writ jurisdiction.

Legislation cited

Constitution of Indias. Article 226

Subjects

breach of contractwrit petitionArticle 226non‑statutory contractfactual disputemaintainabilitycivil remedyState contract

Judgment

ORISSA AGRO INDUSTRIES CORPORATION LTD. AND ORS. A
v.
SHARATI INDUSTRIES AND ORS.

NOVEMBER 8, 2005

[ARIJITPASAYAT ANDC.K. THAKKER,JJ.] B

Constitution of India, 1950-Article 226-A/legation of breach of
contract by State-Contract non-statutory in nature-Writ Petition by
aggrieved party-Maintainability of-Held, not maintainable-More so since
disputed questions offact were involved-Writ petitioner may however resort C
to any other remedy as available in law.
Respondent No. I entered into a contract to lift unserviceable
mach,ineries/equipments and other scrap materials belonging to appellant-
State Corporation. But a dispute arose with regard to the value of the articles
lifted. Consequently Respondent No.I filed writ petition alleging breach of D
contract on the part of the appellant-State Corporation. The High Court
observed that disputed questions of fact were involved which cannot be
adjudicated in a writ petition, yet allowed the petition virtually on the basis of
the assertions of Respondent No.I. The Court held that though the appellant-
___j corporation pleaded that articles worth nearly Rupees 14.90 lakhs were lifted, E
" there was no specific indication of the items and on.that basis held that when
Respondent No. I claimed that he had taken goods worth Rupees 3,75,300
and had deposited a sum of Rupees 11 lakhs with the appellant-corporation,
latter was to pay back a sum of Rupees 8.S lakhs to Respondent No. I. Hence
the present appeal.
F
Allowing the appeal, the Court

HELD: 1.1. The judgment of High Court is clearly unsustainable and is
set aside. A bare perusal of the High Court's judgment shows that there was
clear non-application of mind. On one hand the High Court observed that the
disputed questions cannot be gone- into in its writ jurisdiction. It was also G
noticed that essence of dispute was breach of contract. After coming to the
above conclusions the High Court should have dismissed the writ petition.
Surprisingly, the High Court proceeded to examine the case solely on the
assertion of Respondent No. I-writ petitioner and on a very curious reasoning
that though the appellant-corporation claimed that the value of articles lifted
55 If
56 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.
"
A was nearly Rupees 14.90 lakhs no details were specifically given. From the
counter-affidavit filed before the High Court by the appellant-corporation it
I
is crystal clear that relevant details disputing claim of the writ petitioner were
given. (60-G-H; 61-A; 62-C)

1.2. Value of articles lifted by the writ petitioner is a disputed factual
B . question. Where a complicated question of fact is Involved and the matter
requires thorough proof on factual aspects, the High Court should not
entertain the writ petition. Whether or not the High Court should exercise
jurisdiction under Article 226 of the Constitution would largely depend upon
the nature of dispute and if the dispute cannot be resolved without going into ,
the factual controversy, the High Court should not entertain the writ petition.
c (61-B-C)

1.3. In the present case, the writ petition was primarily founded on
allegation of breach of contract Question whether the action of the opposite
party in the writ petition amounted to breach of contractual obligation
D . ultimately depends on facts and would require material evidence to be
scrutinized and in such a case writ jurisdiction should not be exercised.
(61-C)

State ofBiharv. Jain Plastic & Chemicals ltd, (200211SCC216, relied
on.
E
1.4. Where disput~ revolves round questions of fact, the mittter ought
not be entertained under Article 226 of the Constitution. (61-D)

State Bank ofIndia and Ors. .v. State Bank of India Canteen Employees'
Union and Ors., (19981 5 SCC 74 and Chairman, .Grid Corporation of Orissa
Ltd (GRIDCO) and Ors. v. Sukamani Das (Smt.) and Anr., (1999) 7 SCC 298.
..
F
relied on.

1.5. In the Instant case the High Court has itself observed that disputed
questions of fact were involved and yet went on to give directions as if it was
adjudicating the money claim in a suit The course is clearly impermissible.
G (61-EI

General Manager Kisan Sahkari Chini Mills ltd., Sultanpur U.P. v.
Satrughan Nishad and Ors., (20031 8 SCC 639; Rourke/a Shramik Sangh v.
Steel Authority ofIndia Ltd. and Anr., (2003) 4 SCC 317; National Highways
Authority of India v. Ganga Enterprises and Anr., (2003) 7 SCC 410; Har
H Shankar and Ors. etc. etc. v. The Deputy Excise and Taxation Commissioner
ORiSSA AGRO INDUSTRIES CORPN. LTD. v. BHARA TI INDUSTRIES [PASA YAT, J.J 57

and Ors., AIR (1975) SC 1121 and The Divisional Forest Officer v. Bishwanath A
Tea Co. Ltd, AIR (1981) SC 1368, relied on.

2. In Mis. Radhakrishna Agarwal and Ors. Y. State of Bihar and Ors..
the types of cases in which breaches of alleged obligation by the State or its
agents can be set up were enumerated. The third category, indicated is where
the contract entered into between the State and the person aggrieved is non- B
statutory and purely contractual and the rights and liabilities of the parties
are governed by the terms of the contract and in exerise of executive power of
. the State. The present case is covered by the said category. No writ order can
be issued under Article 226 to compel 'the authorities to remedy a breach of ·
contract; pure and simple. It is more so when factual disputes are involved. C
[62-B-C]

Mis. Radha Krishna Agarwal and Ors. v. State of Bihar and Ors.. AIR
(1977) SC 1496, relied on. ·

3. However, this Court's interference in the matter shall not stand in
the way of the Respondent No. 1 seeking any other remedy as is available in D
law. (62-D)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 39 of 1999.

From the Judgment and Order dated 2.12.97 of the Orissa High Court
in O.J.C. No. 8488 of 1995. E
Kedar Nath Tripathy and Shibashish Misra for the Appellants.

Respondent-In-person (Sada Nand Mishra, Power of Attorney Holder).

The Judgment of the Court was delivered by
F
ARIJIT PASAYAT, J. Challenge in this appeal is to the judgment rendered
by a Division Bench of the Otissa High Court directing the appellant-
Corporation to pay to the respondent no. l a sum of Rs. 8.5 lakhs within a
period of three months from the date of order with default stipulation that in
case of non-payment the amount shall carry interest @ 12% p.a. after three
months. The writ petition filed by respondent no. l was accordingly allowed. G
Background facts as projected by the writ petitioner in a nutshell are
as follows:

Appellant-Corporation for disposal of its unserviceable machineries/
H
58 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.

A equipments and other scrap materials called for successive tenders on three
different dates, but because of low offers ca11celled them and the respondent
no. l writ petitioner on all these occasions was a tenderer. On the last
occasion the writ petitioner offered price of Rs. 4,950 per metric tonne. However,
ultimately on negotiation his offer of a lump sum of Rs. 55,00,000 for the entire
lot described in the schedules of the list of articles was accepted. It was
B stipulated that the entire lifting should be completed by 30.11~1993. The, writ
petitioner besides the deposit of Rs. 2,75,000 being the earnest money was
required to deposit Rs. 11,00,000 as first instalment being I/5th of the total
price offered by him, which he undisputedly deposited by bank draft dated
27.9.1993. After depositing the amount, according to the writ petitioner when
C he went to take delivery of the materials he was disappointed to see that many
valuable and/or important parts from the truck and jeep etc. were missing. In
respect of some other materials, it was found to have been shifted to the
Central Store. Further, though item nos. 16, 17 and 18 of the Schedule 9 were
tp be delivered pursuant to delivery order, they were not available at the store
at Kalahandi. So far as item no. 32 which related to a 'trekker' the same was
D found to have been seized by the Bhawanipatna police in connection with
some theft case. Instead of facilitating lifting of the materials, for which the
money was paid, the officials of the Corporation asked the writ petitioner to
deposit the second instalment of Rs. 11,00,000 for taking delivery of the
second lot of materials and it was given out by them that question of
E consideration of release of the vehicle (sl. 32) would be considered only after
the second instalment amount was deposited. surprisingly enough without
any response to the various letters of the writ petitioner about such deficiencies
sent on different dates, the Corporation by letter dated 2.3.1994 directed the
writ petitioner to deposit the balance price amounting to Rs. 40, 16,000 within
a period of fifteen days. The writ petitioner by his letter dated 27.4.1994 gave
F details of articles which were found missing and also stated that although he
had deposited Rs. 14,84,000 which included earnest money, it could take
delivery of goods only worth Rs. 3,75,000, since rest of the materials could
not be lifted because of inaction of the functionaries of the Corporation. As
no positive response was received, writ petition was filed.
G The appellant-Corporation filed a counter-affidavit taking the stand that
writ petitioner's claim was merely a money claim arising out of alleged breach
of contract and, therefore, the writ petition was not maintainable, since an
alternative remedy in the civil court is available. It was further stated that the
writ petitioner had taken delivery of materials worth about rupees 14.9 lakhs.
H The allegations of missing or removal of important valuable parts from the
ORISSA AGRO INDUSTRIES CORPN. LTD. v. BHARA Tl INDUSTRIES [PASA YAT, J.) 59

truck and jeep were specifically denied. It was stated that there was no A
negligence or !aches on the part of the Corporation. On the other hand, it was
the inaction and ill motive on the part of the writ petitioner who wanted to
lift the valuable items out of schedule 1 to 20 of the list of articles. After
considering the rival stands the High Court came to a conclusion that since
there were disputed facts those cannot be adjudicated in a writ petition. It was B
noted by the High Court that after hearing the learned counsel for the parties
it was noticed that a lot of statements were made by the writ petitioner which
were disputed by the opposite party-Corporation. The main dispute revolved
ro.und the value of article lifted by the writ petitioner. After having concluded
that the disputed facts cannot be adjudicated in a writ petition, the High Court
came to apparently contradictory conclusions/findings. Some of them are C
quoted below:

"However, we feel that the stipulation under the contract that the
materials which admittedly stood at such distant places be lifted
within a short period is difficult one to be fulfilled, even the party
makes his best effort for the same to lift the same. Availability of stock D
at such distant places is itself a factor to create bottleneck in many
ways to get them lifted from their respective places.

Be that as it may, from the allegation and counter allegation of the
parties the mercantile cordiality is broker and it will be difficult to join
the thread even if we direct. Therefore, we feel it appropriate to E
consider the petitioner's prayer for the refund of his amount which
will be rather a just relief the petitioner may be entitled to get in
equity."

The High Court also noted that though it was pleaded that articles
worth nearly rupees 14.90 lakhs were lifted, there was no specific indication F
of the items. Only on that basis the High Court held that when the writ
petitioner claimed that he had taken goods worth rupees 3,75,300 and had
deposited a sum of rupees 11 lakhs with the appellant-Corporation, latter was
to pay back a sum of rupees 8.5 lakhs to the writ petitioner. The writ petition
as indicated above was allowed. G
In support of the appeal, learned counsel for the appellant-Corporation
and its functionaries submitted that the High Court's conclusions are
contradictory in terms. On one hand the High Court held that the factual
questions cannot be adjudicated in a writ petition. Strangely enough after this
conclusion, the High Court virtually on the basis of the writ petitioner's H
60 SUPREME COURT REPORTS (2005] SUPP. 5 S.C.R.

A assertions directed payment of rupees 8.5 Iakhs. Abundant documentary
evidence was placed by the Corporation to substantiate its claim that the writ
petitioner had lifted goods worth nearly rupees 14.90 lakhs. The writ petitioner
had alleged breach of a contract and on highly disputed factual position
prayed for relief under Article 226 of the Constitution of India, 1950 (in short
B the 'Constitution') which is clearly untenable. The writ petition should not
have been entertained.

In response, Mr. Sada Nand Mishra, Power of Attorney Holder of
respondent no. I-writ petitioner submitted that there was no factual dispute.
In fact, the appellant-Corporation with a view to confuse the issues and
C introduced untenable disputes. It is pointed out that effort was made to arrive
at a compromise by the Corporation apprehending non success in the appeal.
That itself is a ground to dismiss the appeal.

By way of clarification, learned counsel for the appellant-Corporation
brought on record correspondences between the writ petitioner and the
D appellant-Corporation. It appears that to sort out the controversy the
Corporation wanted to explore the possibility of a settlement. But the writ
petitioner made a claim of rupees 18.46 lakhs which include the following
amounts:

1. Amount as per order of High Rs. 8.50 lakhs
E Court of Orissa

2 Interest accrued thereon Rs. 6.12 lakhs

3. Security Money (EMD) Rs. 2. 75 lakhs

F 4. Additional Deposit Rs. 1.09 Iakhs

Rs. 18.46 lakhs

He did not want to settle and insisted on Corporation paying the above
amount.
G
A bare perusal of the High Court's judgment shows that there was clear
non-application of mind. On one hand the High Court observed that the
disputed questions cannot be gone into a writ petition. It was also noticed
that essence of dispute was breach of contract. ·After coming to the above
conclusions the High Court should have dismissed the writ petition.
H Surprisingly, the High Court proceeded to examine the case solely on the writ
ORISSAAGRO INDUSTRIES CORPN. LTD. v. BHARAT! INDUSTRIES [PASAYAT, J.J 61

petitioner's assertion and on a very curious reasoning that though the A
appellant-Corporation claimed that the value of articles lifted was nearly
rupees 14.90 lakhs no details were specifically given. From the counter-
affidavit filed before the High Court it is crystal clear that relevant details
disputing claim of the writ petitioner were given. Value of articles lifted by the
writ petitioner is a disputed factual question. Where a complicated question B
of fact is involved and the matter requires thorough proof on factual aspects,
the High Court should not entertain the writ petition. Whether or not the High
Court should exercise jurisdiction under Article 226 of the Constitution would
largely depend upon the nature of dispute and if the dispute cannot be
resolved without going into the factual controversy, the High Court should
not entertain the writ petition. As noted above, the writ petition was primarily C
founded on allegation of breach of contract. Question whether the action of
the opposite party in the writ petition amounted to breach of contractual
obligation ultimately depends on facts and would require material evidence
to be scrutinized and in such a case writ jurisdiction should not be exercised.
(See: State of Bihar v. Jain Plastic and Chemicals Ltd., [2002] I SCC 216).
D
In a catena of cases this Court had held that where dispute revolves
round questions of fact, the matter ought not be entertained under Article 226
of the Constitution. (See: State Bank of India and Ors. v. State Bank of India
Canteen Employees' Union and Ors., [1998] 5 sec 74, Chairman, Grid
Corporation of Orissa Ltd. (GRIDCO) and Ors. v. Sukamani Das (Smt.) and E
Anr., [1999] 7 sec 298).

In the instant case the High Court has itself observed that disputed
questions of fact were involved and yet went on to give directions as if it
was adjudicating the money claim in a suit. The course is clearly impermissible.
(See: General Manager Kisan Sahkari Chini Mills Ltd, Sultanpur UP. v. F
Satrughan Nishad and Ors., [2003] 8 SCC 639, Rourke/a Shramik Sangh v.
Steel .fothority of India Ltd. and Anr., [2003] 4 SCC 317).

In National Highways Authority of India v. Ganga Enterpress and
Anr., [2003] 7 SCC 410, it was observed by this Court that the question
whether the writ petition was maintainable in a claim arising out of a breach G
of contract should be answered first by the High Court as it would go to the
root of the matter. The writ petitioner had displayed ingenuity in its search
for invalidating circumstances; but a writ petition is not an appropriate remedy
for impeaching contractual obligations. (See: Har Shank.or and Ors. etc. etc.
v. The Deputy Excise and Taxation Commissioner and Ors., AIR (1975) SC H
62 SUPREME COURT REPORTS (2005) SUPP. 5 S.C.R.

A l 121 and The Divisional Forest Officer v. Bishwanath Tea Co. Ltd, AIR
(l 981) SC 1368).

In Mis. Radhakrishna Agarwal and Ors. v. State of Bihar and Ors., AIR
(1977) SC 1496, the types of cases in which breaches of alleged obligation by
the State or its agents can be set up were enumerated. The third category,
B indicated is where the contract entered into between the State and the person
aggrieved in 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. The present case is covered by the said category.
No writ order can be issued under Article 226 to compel the authorities to
•
C remedy a breach of contract; pure and simple. It is more so when factual
disputes are involved.

Above being the pos1t1on the High Court's judgment is clearly
unsustainable and is set aside. However, our interference in the matter shall
not stand in the way of the writ petitioner seeking any other remedy as is
D available in law.

The appeal is allowed. But in the circumstances without any order as
to costs.

B.B.B. Appeal allowed.