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Disputed question of facts arising out of contract cannot be resolved through the jurisdiction under Article 226

It is settled law that the rights arising out a contract cannot be resolved through the discretionary jurisdiction of this Court under Article 226 of the Constitution of India; especially when disputed questions of facts are involved. This judgment was pronounced by the division bench of the Chhattisgarh High Court consisting hon’ble Chief Justice P.R. Ramachandra Menon and Justice Shri Parth Prateem Sahu in the matter of Niranjan Lal Agarwal v. Coal India Limited and others., [W.A 178/2020].

The petitioner in the present writ petition alleged that the Fixed Deposit Receipt (FDR) which was arranged by the appellant in favor of the respondent company towards ‘performance security’ was not released by the company even after issuing the work completion certificate. It was anyway brought up that, when steps were being taken to release the sum, a few directions were obtained from the specialists of the GST/Central Excise Department to retain the installment including the security store, in light of the obligation to be cleared by the Writ Petitioner to the Government. It was in the said situation, that the installments were not affected and the FDR was not caused to be returned/released.

The learned Single Judge observed that there were disputed questions of fact, which could not be resolved in a proceeding under Article 226 of the Constitution of India. It was also observed that the reasons for non-disbursement of the amount due to the Writ Petitioner was because of the instructions given from the part of the authorities of the Central Government. In the said circumstance, interference was declined and the writ petition was dismissed, which is put to challenge in this appeal.

The division bench of Chhattisgarh High Court upheld the observations made by the learned Single Judge and opined that:
When the Appellant/Writ Petitioner contends that the work involved in the present tender is admittedly complete (as certified by the Respondent-Company) but the amount due has not been released, the Respondent-Company contends that another work order given to the Writ Petitioner came to be terminated ‘at the risk and cost’ to the Writ Petitioner, for the default committed by him and that a sum of about Rs.6 Crores is due to the Respondent-Company.

In view of the 4 disputed question of facts, the prayer sought for with respect to the amounts payable under the final bill cannot be adjudicated by this Court and hence, interference is not possible. It is for the Writ Petitioner to avail appropriate remedy before other appropriate forum, in accordance with law with respect to this head.

The pleadings filed by the Respondent-Company and the submissions made through the learned counsel do not reconcile with the deeds pursued. We record our displeasure as to the casual way in which the matter has been dealt with by the Respondent-Company by way of incorrect or inconsistent submissions as to the release of the FDR; at the same time, retaining the same at their hands. It may amount to Contempt of Court as well, where serious action may be necessary in view of the verdict rendered by the Apex Court in case of Dhananjay Sharma v. State of Haryana and Others reported in AIR 1995 SC 1795.

The 4th Respondent is directed to disburse the amount due to the Appellant towards the FDR forthwith, at any rate within one week thereafter. If there is any failure on the part of the Respondent-Company in acting as above, it shall be for the 4th Respondent-Bank to release the FDR to the account of the Appellant/Writ Petitioner, notwithstanding any such lapse on the part of the Respondent-Company and such payment will discharge the 4th Respondent from any liability to the Respondent-Company in connection with the FDR arranged towards the performance security. The verdict passed by the learned Single Judge stands modified to the above limited extent.”

Written By: Prime Legal Law Firm
Off Address: 39/2, 2nd floor, K G Road, Bengaluru, Karnataka-560001
Phone no: +9986386002, Email: [email protected]

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