Can writ under Art. 226 of Constitution be enforced if any duty or obligation falling upon a public servant out of a contract entered into by him as such public servant? Orissa HC discusses

Orissa High Court: A Division Bench of S. Muralidhar CJ. and B. P Routray J. dismissed the petition on grounds discussed below.

The facts of the case are such that the Food Corporation of India i.e. `FCI (Opposite 1 and 2) being the nodal organization of the Government of India, delivers food grains to different parts of the State of Odisha and for such purpose it uses the space available in different warehouses under OSWC for storing and facilitating movement of the food grains on contract basis. The Petitioner executed a contract with Odisha State Warehousing Corporation i.e. OSWC (Opposite Party 1 and 2) effective for a period of two years for Handling and Transportation (H & T) of foodgrains and other allied materials at OSWC as per the quoted rate of contract. The said contract was extendable for a further period of three months. The contract was extended twice before the expiration of their respective previous contracts as the tender issued for the purpose could not be materialized. Those two extensions were granted with the same rate of contract but on further extension, FCI expressed dissatisfaction and put a condition that, the rate applicable for the extended period would be the existing rate or the new rate, whichever is lower. The new agreement was executed and the rate of contract was much lesser than the earlier rate of contract fixed as per the original contract. Thus, for the bills raised by OSWC after 31st March 2017, FCI deducted the amount calculated on the differential rate between the rate of contract existed as per the 2013 agreement and 2017 agreement. As a result, OSWC realized the differential amount from the bill of the Petitioner and this is the subject matter of the dispute in the present petition.

Counsel for the petitioners Mr. P.K.Roy submitted that realization of differential amount from its bill with retrospective effect is grossly illegal and the same is violation of statutory rules as no opportunity of showing any cause or hearing has been granted. It is further contended that in the absence of any agreement after 31st October, 2015 till 31st March 2017, the rate applicable would be the existing rate as per the 2013 agreement.

Counsel for the respondents Mr. P.K. Rath, Mr. Bijay Kumar Dash and Mr. Debasish Nayak submitted that the Petitioner has not come with clean hands as the entire dispute has emanated from contractual obligations and, therefore, the writ petition under Article 226 would not be maintainable. It is further contended that the petitioner continued H & T work with OSWC having been aware of the stipulation of change in rate of contract, is estopped from raising the dispute at realization stage.

The Court observed that realization of the differential amount at a lower rate in absence of any existing contract is not contentious as it is clear that being fully aware of the lower rate, which may be stipulated in the new contract, the Petitioner continued with the work for the extended period.

The Court observed “Once the Petitioner has accepted the condition with a lower rate than the existing rate which may be effected for the period it continued with the work on extension, it hardly makes any difference whether a written contract on specific term is executed or not. Thus, the Petitioner now cannot claim that such a stipulation at the lower rate to realize the differential amount was without his knowledge.”

The Court relied on judgment Kerala State Electricity Board v. Kurien E. Kalathil (2000) 6 SCC 293 wherein it was held that

“11. 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.

The Court observed that the petitioner is unable to point out the violation of any statutory rule in its favour. The rate on which work is to be performed, flows from the contract executed between the Petitioner and OSWC.

The Court thus held “….Therefore, adjudication of the dispute in the writ jurisdiction in the present form is neither appropriate nor feasible.”[Jayasingh Bhoi v. OSWC, 2021 SCC OnLine Ori 630, decided on 31-05-2021]

Arunima Bose, Editorial Assistant has reported this brief.

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