1. The petitioners in this group of petitions are consumers of respondent No.2 GAIL (India) Ltd. and all petitioners have, entered into contract with respondent No.2 for sale / supply of gas.
2. The facts and circumstances involved in and leading to submissions of present petitions are almost same and the contracts between the petitioners and the respondent No.2 and the demand raised by the respondent No.2 i.e. the subject matter of the petitions are also similar and the learned Senior Counsel appearing for the petitioners have stipulated that relief/s prayed for in all petitions are similar. In all petitions the respondents are also common. Learned Senior Counsel appearing for the petitioners in all petitions and learned advocate appearing for respondent No.2 as well as Mr. Champaneri, learned Assistant Solicitor General of India appearing for respondent No.1 have raised common contentions and defence for all petitions. Therefore present common order is passed for all petitions.
3. In view of the submissions by learned advocate for the petitioners that almost similar relief has been prayed for in all petitions for sake of convenience the relief prayed for in writ petition being Special Civil Application No.11916 of 2012 and the factual background stated in the said petitions are taken into consideration. The petitioners have inter alia prayed that:-
“20 (A). Issue an appropriate writ of or in the nature of mandamus or any other appropriate writ to declare that the respondents are not entitled to charge non- APM price for supply of Gas to the petitioner and be pleased to quash and set aside the Circular No. L-12014/1/10-GP dated 9/2/2010 and letter / circular dated 4/4/2012 at Annexure-A and B issued by respondent No.1 – Union of India Ministry of Petroleum and Natural Gas and the decisions and the debit notes raised by the respondent No.2- GAIL (India) Limited at Annexure D and E and be further pleased to restrain the respondents from making any recovery towards the debit notes at Annexure C-2 and D-2 hereto and from recovering any price difference for the period from 01/07/2005 to 31/03/2010 from the petitioner.
(B) During the pendency of this petition, stay implementation, execution and operation of the Circular No. L-12014/1/10-GP dated 9/2/2010 and letter / circular dated 4/4/2012 at Annexure A and B issued by respondent No.1-Union of India- Ministry of Petroleum and Natural Gas and the decisions and debit notes raised by the respondent No.2- GAIL (India) Limited at and restrain the respondents from making any coercive recovery towards the debit notes at Annexure D and E hereto and from recovering any price difference for the period from 01/07/2005 to 31/03/2010 from the petitioner. The respondents also be restrained from taking any other coercive measures and invoking the letter of credit given by the petitioner or disconnection or interruption of gas supply.
(C). ........
(D). ........
(E) ”
3.1 The petitioners are, aggrieved by the respondents' demand for payment of price (for gas supplied / sold by respondent No.2 to the petitioners beyond APM allocation) at non-APM (Administered Price Mechanism) price for past period instead of APM price and also by the Demand Notes dated 22.5.2012 and 7.8.2012 for the period from 1.7.2005 to 31.3.2010. It is necessary to note that for the period from April, 2010 the petitioners also have accepted the said decision / change in respect of supply of gas beyond APM allocation.
4. So as to appreciate rival contentions raised by the learned advocate for the petitioners and respondents, it is necessary to take into account the relevant provisions from the contracts entered into by and between the petitioners and respondent No.2 which is the primary document governing the contractual relation between the petitioners and respondent No.2 as the contracts contain the terms and conditions which are accepted as binding by the parties. It is stipulated by learned Senior Counsel for the petitioners and learned advocate for the respondent No.2 that the contracts executed with all petitioners are identical except some changes as to the dates and contracted quantity (which, in any case, does not exceed 0.05MMSCMD).
4.1 The relevant provisions read thus:-
“Article 2. Gas Sale, Purchase and Contract Period.
2.2 Contract Period:
This contract shall into force from 01.04.2006 and shall remain valid for a period upto 31.12.2010 or unless extended according to Article 3 (Extension Period) or terminated by either party upon written notice to the other prior to the and of the duration as provided for in Article 16.
Any arrears or dues receivable by the SELLER / ONGCL from the BUYER on account of Gas supplied shall continue to be receivable by the SELLER / ONGCL and the BUYER undertakes not to fail to discharge the said obligations of clearing such arrears of dues directly with the SELLER / ONGCL. The BUYER further agrees and undertakes that in case of failure and / or default on its part to discharge such obligation, the right and / or claim to receive supply of Gas either under this contract or in any other manner what so ever shall not survive and shall automatically stand forfeited and / or terminated.
Article 5 Quantity.
5.1(a) Subject always to availability of Gas, SELLER's ability to supply to the BUYER and other provisions of this contract including but not limited to Article 9, the SELLER agrees to procure, sell, transport and make available for delivery of the Gas at the delivery point to the BUYER maximum upto Daily Contracted Quantity (DCQ) of Nil Million cubic meters per day.
(B)..............
(C) Provided further SELLER has the right to nominate the daily nominated quantity (DCQ) of Gas, to be supplied on day to day basis which notwithstanding article 5.1 (a) and (b) shall be the final quantity for that day(s) For the purpose of the DNQ the SELLER shall inform the BUYER the DNQ of the day latest by 22.00 hrs previous day (i.e. for example DNQ for 20th February, shall be informed by 22.00 hrs of 19th February)
5.2. .........
5.3. ...........
5.4. ...........
5.5. ...........
5.6 Overdrawl Gas
(a) Notwithstanding Article 8.8, and without limiting the SELLER's right under Article 16, and unless or otherwise approved by Govt. of India or agreed in writing between the SELLER and the BUYER, the BUYER draws Gas during any fortnight in excess of DNQ calculated for the fortnight, such gas shall be termed as unauthorized overdrawl gas and shall be paid for in the manner as provided under Article 5.6(c). Further, it on any day(s) during the fortnight the BUYER draws gas in excess of reasonable limits, the SELLER reserves the right to restrict the drawl of Gas by the BUYER during such day(s)
(b) Subject to other provision(s) under this contract, nothing under Article 5.6(a) and Article 5.6(c) confer / confirm any prescriptive right to the BUYER on such unauthorized overdrawl gas and to draw / purchase such unauthorized overdrawl gas nor obligation on either Govt. of India and / or on the SELLER to procure, sell and transport such unauthorized overdrawl gas to the BUYER.
(c) Unauthorized overdrawal charges shall be charged as follows on the unauthorized overdrawl gas;
(i) Unauthorized overdrawl charges for such unauthorized overdrawl gas shall be equivalent to 12% of the highest priced gas supplied in the system plus all other charges as mentioned at article 10.2 including taxes and duties as applicable. (d).........
Article 10 Price.
10.0 Commencing from the contractual date and during the contractual period, Buyer shall pay the price which shall be arrived in the following manner.
10.1 Gas Price:
(a) For the supply of gas against the quantity mentioned at Article 5.1 the price of Rs.3200/- per 1000 (one thousand) Standard Cubic Meters of Gas w.e.f. 01.07.2005 is applicable as per Government Pricing order No. L.12015/5/04/GP (1) dated 20.06.2005 (Annexure II). The price is linked to a calorific value of 1000 kcal / standard cubic meters on Net calorific Value (NCV) basis.
(b) Notwithstanding article 10.1 (a) the seller shall have right to fix the gas price at any time in future as per directive, instruction, order, etc. of the Government of India issued from time to time and the buyer shall pay to the seller such price of gas fixed by the seller.
10.2 In addition to gas price as mentioned under article 10.1 above the buyer shall pay to the seller the following charges (as applicable):
(a) Deleted
(b) The fixed monthly transmission charges of Rs.163736/- (Rupees one lac sixty three thousand seven hundred thirty six only) per month plus additional transmission charges at the unit rate of Rs. 350/- (Rs. Three hundred fifty only) per thousand standard cubic meters for the quantity over and above the quantity as mentioned under article 5.1
(c) Deleted
(d) Deleted
(e) Other charges like marketing charges, compression charges (as applicable) The above monthly transmission charges / additional monthly transmission charges as mentioned at 10.2.b shall be escalated by 3 (three) percent on yearly basis with effect from 01.04.2007 (First April Two Thousand and Seven). The above monthly / unit rate transmission charges is exclusive of replacement / modifications of the existing pipeline and associated facilities (including compression facility) wholly / partly for supply of gas to the buyer at the delivery point, cost of such additional facility shall be applicable from the date of notice / agreement of such replacement / modification.
Article 12
12.1 Fortnight Invoice:
The buyer shall open and maintain at its cost an irrevocable stand by revolving letter of credit with any nationalized / scheduled bank (acceptable to seller) covering the value of 16 (sixteen) days supply of gas at contracted quantity as per article 5.1 plus transmission / service charges payable as per article 10.2 in favour of the seller during currency of the contract. Provided further that L/C shall provide coverage of the value of supply of gas for a period of three fortnights and the validity of L/C shall invariably be renewed before the expiry of the current L/C. Provided further that the letter of credit should stipulate that all charges including negotiations and interest, if any, shall be borne by the buyer.
12.2 The seller shall raise invoice for the fortnight covering the following-
1. Gas Quantity actually supplied
2. DNQ
3. Gas price as mentioned at article 12.1 for the quantity supplied
4. Fixed monthly charges as per article 10.2(b)
5. Transmission charges for the quantity supplied as per article 10.2(a)
6. Compression charges
7. Unauthorized overdrawl charges
8. Other charges as applicable.
12.2 The invoice and payment for substitute gas supplied by the seller shall be as per the terms and conditions for such gas.
12.3.........
12.4 The seller will raise the invoice for each fortnight and the buyer agrees to pay the invoices so raised in full within 3 (three) working days of presentation of the said invoice. Provided if the buyer pays the invoices by transfer of funds to the designated account of the seller through electronic mode (e-banking) then the payment shall be made within 4 (four) working days of presentation of the said invoice through any of the banks (HDFC/ICICI/SBI/ as designated by seller from time to time). If for any reasons, the payment is delayed or any disallowance is made from the invoice, the seller will present the invoice for disallowance is made from the invoice, the seller will present the invoice for full amount for the amount not paid as the case may be to the bank against the letter of credit and draw the amount. The buyer shall make arrangements with the bank in a manner that in such an eventuality 3 (three) fortnights' value of supply of gas is fully reinstated / replenished. In case, of delay, seller shall have unrestricted right to stop / regulate the supplies.
12.5 In case of any discrepancy / dispute, regarding the invoices, the buyer shall not return the bills or withhold or disallow part or full payment. After making the full payment of buyer shall be lodge a quantified claim with the seller within the period of 14 (fourteen) days from the date of receipt of the related invoice. To the extent the claim is admitted by the seller, the seller shall issue a credit note in favour of the buyer and adjust the same in the next invoice to be raised. The seller undertakes to consider the claim of the buyer within a period of 30 (thirty) days from the receipt of such claim, if found acceptable, failure of the buyer to put forward any claim within the time above specified shall be an absolute waiver of any claim.
12.6 The buyer shall always, during validity of the contract, keep an irrevocable stand by revolving letter of credit (L/C) operative as stipulated in clauses 12.1 & 12.2 above. In case payment is made after the due date, an interest at the rate of SBI standard PLR applicable to working capital will be taken as a base and an additional 2 % be charged over and above PLR as applicable for the period of delay, subject to condition that seller reserves its right in its absolute discretion, for upward revision in the interest rates on delayed payment. For calculating interest for any delayed payment SBI PLR shall be the highest one during the delay period. Delayed payment means any payment not received within the period provided in article 12.2 above. In case of default in making payments by the buyer or failure of buyer to keep L/C operative, without prejudice to other rights under the contract the seller shall be at liberty to stop / regulate supply of GAS without any further notice and supplies may not be resumed till all payments are made and L/C restored. The provisions of Article 5.2 would be applicable for billing and payment for the period during which the the supply of GAS is stopped on account of delayed payment or L/C not being reinstated by the buyer
12.7 ”
5. So far as the relevant facts are concerned, petitioners are private limited or public limited companies. All petitioners are engaged in manufacturing activities and for the said purpose the petitioners are using Gas as fuel, which is being supplied / sold by respondent No.2 under the above referred contract/s.
5.1 The dispute raised in the petitions is about the price of gas sought to be charged by respondent No.2 for which debit note/s dated 22.5.2012 and 7.8.2012 have been issued for the period from July 2005 to March 2010.
5.2 Before proceeding further it is relevant to mention that it appears that the respondent No.2, as per directions by respondent No.1, applies atleast 2 sets of price to its consumers, depending on the category / class to which the consumer/s belong. One set of price is known as Administered Price Mechanism (APM price) which is relatively less than the other set of price which is known as non-APM rates (or market driven price). The respondent No.2 supplies / sells gas at APM rates to only certain selected categories of consumers e.g. Power Sector Industries, Fertilizer industries and small scale consumers. Those consumers whose maximum daily contracted quantity (DCQ) is not more than 0.05MMSCMD are allowed APM rates and they are allocated quantity of gas which is fixed by gas linkage committee (GLC). The gas supplied to said selected category of consumers is commonly described as APM allocation gas. Thus APM allocation gas is sold / supplied at APM rates and APM rates is applicable to and available for APM allocation gas. The said pricing policy flows from the order of respondent No.1 which is commonly known as “pricing order” dated 20.6.2005.
5.3 By communication dated 9.2.2010 addressed by respondent No.1 to respondent No.2, which is the point from where the cause of dispute and differences between the parties have arisen, the respondent No.1 instructed respondent No.2 to charge non-APM price for supplies beyond APM allocation. The said communication dated 9.2.2010, in turn, makes reference of the prising order dated 20.6.2005.
5.4 The reference of pricing order is expressly made by the parties in the contract i.e. in clause 10.1. The pricing order contains reference of APM allocation and APM rates.
5.5 So far as the prising order dated 20.6.2005 is concerned, the parties have placed reliance on clause (ii), (iii), (iv) and (viii) which read thus:-
“(ii) As far as the gas produced by ONGC and oil is concerned, the determination of producer prices for this gas will be referred to the tariff commission and the commission will be asked to submit it's report within a period of six months. At present, ONGC and OIL produce about 55MMSCMD gas (hereinafter referred to as APM gas) till the tariff commission submits its recommendation and a decision is taken thereon, the consumer price of APM gas will be increases from the existing price of Rs.2850/MCM to a fixed price of Rs.3250/MCM on adhoc basis.
(iii) Power and fertilizer sectors are critical to the economic development of the country and the output price of these sectors is either controlled or regulated by the central and state governments, who have to bear subsidy to a large extent for any increase in the output price. The specific end users committed under Court Orders / small scale consumers having allocations upto 0.05MMSCMD also deserve priority in gas supply. Accordingly it has been decided in the public interest that all available APM gas would be supplied to only the power and fertilizer sector consumers against their existing allocations along with the specific end users committed under Court Orders / small scale consumers having allocations upto 0.05MMSCMD at the revised price of Rs.3200/MCM. This price would be linked to a calorific value of Rs.10,000 K.ca/cubic metre. However gas price for transport sector (CNG) Agra – Faizabad small industries and other small scale consumers having allocations upto 0.05MMSCMD would be progressively increased over the next 3 to 5 years to reflect the market price.
(iv) Consumers other than fertilize, power and specific end users committed under Court Orders / small scale consumers having allocations upto 0.05 MMSCMD and getting existing gas supplies through GAIL network would be supplied natural gas at market related price depending on the producer price being paid to the joint venture and private operators at landfall pint,subject to a ceiling of ex-Dahej RLNG (regassified LNG) price of US$ 3.86/MMBBTU for the current year i.e. 2005-06.
(viii) Subject to the determination of producer price based on the recommendation of the tariff commission, any additional gas as well as future production of gas from new fields to be developed in future by ONGC / OIL will be sold at market – related price in the context of NELP provisions.”
5.6 So far as the aforesaid communication dated 9.2.2010 is concerned, the said communication contains instructions issued by respondent No.1 to respondent No.2, which read thus:-
“Sir, Information regarding supply of gas to various APM customers has been obtained from Gail and ONGC. It has been observed that the supply to some of these customers exceeds the APM allocation made by the Gas linkage committee (GLC).
2. It has been clearly mentioned in the pricing order issued vide Ministry letter No.L.12015/4/GP(i) dated 20.6.2005 that APM gas has to be supplied against existing allocations. Hence, it is obvious that supply of APM gas of APM rate is limited to the extent of APM allocation made by the erstwhile GLC. Any supply beyond APM allocation would have to be made at non-APM rates as determined by the Government. This is only an implementation of the pricing order dated 20.6.2005 and, accordingly, needs to be implemented from the date of applicability of that order, viz. 01.07.2005. Hence GAIL should immediately switch to charging non APM price for supplies beyond APM allocation. Meanwhile, the amount due from 1.7.2005 may be worked out and recovered by GAIL.
3. Further, if a customer is being supplied gas at a higher level than the APM allocation on a sustained and continuous basis, it does not seem to be a satisfactory arrangement. It such cases, additional allocation to the same customers or new allocations need to be considered; proposals for the same could be send to the Ministry.”
5.7 The petitioners, in light of the said communication dated 9.2.2010, have vehemently contended that until the respondent No.1 issued the said communication there were no dispute or difference between the petitioners and the respondent No.2 and the subject contract, was duly executed in accordance with the agreed terms and conditions.
5.8 On the other hand learned advocate for respondent No.2 has submitted that it has taken action, which is impugned in present group of petitions, in view of and on account of the said communication dated 9.2.2010, and in exercise of the terms of contract, particularly clause 10.1(a) and 10.1(b).
5.9 Learned Counsel for the contesting parties have placed reliance on communication dated 4.4.2012 issued by respondent No.1 which reads thus:-
“Sir, I am directed to refer to GAIL's letter no. GAIL/CO/GASMKTG/MoPNG/DCQ/2012/260 dated 15.03.2012 on the above subject and to state that GAIL have implemented the Ministry's order vide letter no. L.12014/1/2010. GP dated 09.02.2010 to recover market rates for the APM gas supplied by GAIL for the period 1.7.2005 to 31.03.2010 as clearly stated in para 2 of the order. No further directions are required to be issued in this regard and compliance of the order may be sent immediately to the Ministry.”
5.10 Similarly, the petitioners have also placed reliance on communication dated 23.5.2012 which is the communication and directions issued by respondent No.2 to all petitioners. The said communication reads thus:-
“Dear Sir, This has reference to above referred contracts, as amended from time to time and GAIL's letter Ref.No. GAIL/AZO/MKTG/2010 dated 19.04.2010 on the subject.
Pursuant to directives of MOPNG communicated vide their letter no. L-12014/1/10 GP dated 09.02.2010 (annexure-I) Gail started charging non-APM price w.e.f. 10.4.2010 for the APM gas supplied beyond the APM (GLC) allocation.
MoPNG vide letter no. L-12010/1/2010 GP dated April 4, 2012 (attached as Annexure-II) clarified confirmed and directed GAIL to recover marked rates for APM gas supplied beyond APM (GLC) allocation for the period 01.07.2005 to 31.3.2010.
In view of the above, GAIL has raised the invoice (attached as Annexure-III) of the difference of market rates / price of APM and Non APM beyond GLC allocation which shall be paid immediately as per the provisions of 10.1(b) of the GSTA”
5.11 It is in pursuance of the above referred communication dated 9.2.2010, 4.4.2012 and 23.5.2012 that the respondent No.2 issued, the debit notes claiming payment of amounts mentioned in the respective debit notes. The details about the claims by the respondent No.2 vide debit notes qua each of the petitioners are as follows:-
The respondent has also claimed further interest on the above amounts.
5.12 It is claimed by petitioners that as per the contract entered into between the petitioners and respondent No.2, until February – April, 2010 the petitioners were being supplied gas at APM rates even for quantity beyond APM allocation.
5.13 It is also claimed by the petitioners that until the instruction under communication dated 9.2.2010 came to be issued, respondent No.2 was supplying gas at APM rates and even additional supply (i.e. the supply of quantity beyond APM allocation) by respondent No.2 (in the event of availability of additional / surplus gas out of APM allocation on account of non- drawl by APM consumers) and consequential drawl by the petitioners, was also charged at APM rates and it is only on account of the communication issued, for the first time, in February 2010 by respondent No.1 that the respondent No. 2 has subsequently issued the Demand Note dated 22.5.2012 and the communication dated 23.5.2012 and demanded non-APM rates in respect of additional (i.e. beyond APM allocation) gas which was supplied by the respondent No.2 during the period from 1.7.2005 to 31.3.2010.
5.14 Aggrieved by the debit note by respondent No.2 and the communication dated 23.5.2012 the petitioners have taken out present group of petitions.
6. Mr. S.N. Soparkar, learner Senior Counsel with Mr. Joshi learned Senior Advocate with Mr. Desai, learned advocate and Mr. Bhatt, learned advocate have appeared for the petitioners. Mr. P.S. Champaneri, learned Assistant Solicitor General has appeared for respondent No.1 and Mr. Shah, learned advocate has appeared for respondent No.2 GAIL.
6.1 Learned Senior Counsel for the petitioners has submitted that as per the terms of the contract between the petitioners and the respondent No.2, the petitioners are governed by APM rates and that therefore, the impugned directions by respondent No.1 and / or impugned demand by respondent No. 2 tantamount to variation in terms of the contract. Learned Senior Counsel for petitioners have submitted that impugned demand raised by respondent No.2 is not only time barred but is contrary to the terms and conditions of the contract entered into by the respondent No.1 with present petitioners. It is also contended that variation in terms of the contract and amendment in contract are sought to be made unilaterally and that too without any opportunity of hearing to the petitioners. It is submitted that contracts are sought to be retrospectively amended which is not permissible more so when the contacts are sought to be amended at the direction of the government (respondent No.1) which also is not permissible in view of the terms and condition of the contract. The impugned communication and actions are also challenged on the ground that such retrospective recovery is impermissible in law. It is also claimed that retrospective recovery is sought to be made by wrong interpretation of the circular / letter of respondent No.1 and incorrect interpretation of the pricing order dated 20.6.2005. Learned Senior Counsel for the petitioners have also submitted that the demand for retrospective recovery of differential price is opposed to public policy and is contrary to the contract executed between the petitioners and the respondents. The learned Senior Counsel appearing for the petitioners have further contended that the respondents are not justified in demanding and enforcing market driven price i.e. non-APM price for the additional gas supplied during the period in question i.e. July, 2005 to March, 2010. It is also submitted that the market driven price can be demanded only in respect of future protection of gas from new fields. The main demand notice as well as the letter / circular dated 9.2.2012 and letter / circular dated 4.4.2012 are also challenged on the ground that they are arbitrary, opposed to the public policy, contrary to the terms of contact and based on the wrong interpretation of the terms of contract as well as pricing order. In support of the submission that the writ petitions are maintainable the learned Senior Counsel for the petitioners have claimed that even according to the respondents, the supply of the commodity under the contract is governed and controlled by the government and it affects public interest. Learned Senior Counsel for the petitioners have also submitted that it has now become impossible for the petitioners to recover the said additional burden from consumers or to pass over the said burden to the consumers or to incorporate the effect of the additional burden in the price of their final product and that, therefore, it is not possible for the petitioners to bear the burden which is sought to be imposed by the respondent for due from July 2005 to March 2010, vide debit notes issued in 2012. Learned Senior Counsel for the petitioners have submitted that the claim raised by respondent No.2 is, even otherwise also, time barred and even the contract has expired and new contract has been entered into and executed. Therefore, any claim particularly, time barred claim arising from and on account of the old contract which has expired cannot be enforced. It is also claimed that before issuing the impugned circular / letter dated 9.2.2010, any opportunity of hearing has not been afforded to the petitioners though by said circular / letter retrospective recovery is sought to be made against the petitioners. It is also contended that if the additional gas had not been supplied to the petitioners, the respondent would have been compelled to flare-up said quantity of gas and that therefore also the retrospective demand of non-APM price from the petitioners in respect of such additional supply of gas is unjustified. It is submitted that what is inter alia, challenged by the petitioners is the direction given by the respondent No.1 government and the grievance raised by the petitioners involve public law element. The petitioners have also relied on communication dated 30.3.2006 by respondent No.2 whereby respondent No.2 had, according to the petitioners, stipulated that additional supply of gas would be under Demand Management Scheme and that the terms and conditions of the gas supply contract shall remain unchanged. The petitioners have also relied on letters dated 5.6.2006, 5.7.2006, 29.9.2007 and 8.11.2007 issued by respondent No.2. It is also claimed that the demand and action of retrospective charing of non-APM price is beyond the scope of contract and in violation of article 19(1)(g) of the Constitution of India.
6.2 Learned Senior Counsel for the petitioners have placed on the following decisions:-
(1) 2008 (3) SCC 440,
(2) 2009 Suppl SC 1005,
(3) 2011 (5) SC 697 and
(4) 1986 (1) SCC 264.
6.3 Learned Counsel appearing for the respondent No.2 has opposed the contention raised by the petitioners. The learned Assistant Solicitor General of India for respondent No.1 has opposed the maintainability of the petitions and claimed that the petitions are essentially directed against contractual obligation and that therefore petitions are not maintainable. The issues related to the contractual terms and conditions should not be and cannot be agitated in writ petition, hence petitions for such purpose are not maintainable. It is also contended by the respondents that the petitions are against the monetary claim and that therefore also writ petitions are not proper remedy and the petitions do not deserve to be entertained. Learned Assistant Solicitor General of India has submitted that the terms and condition of the contract provide that any change in price, as decided by government will be binding to the consumer. It is claimed that the petitions involve interpretation of terms and contract and for that purpose writ petitions are not proper and effective remedy and such issues should be agitated in proper proceedings under ordinary civil remedy and not by invoking prerogative writ jurisdiction. Reliance is placed on clause No.10.1(b) of Article 10 and Article No.12 of the contract. Learned Assistant Solicitor General of India also relied on clause No. 5.6, 10.2, 10.3, 12.1, 12.4 and 12.6 of the Contract to support and justify the instructions given by respondent No. 1 and the demand notes raised by respondent No.2. The petitions are also opposed on ground of delay. It is also contended that the dispute involve and require interpretation of terms and conditions of the contract and that therefore writ remedy cannot be invoked and such process in writ proceedings is not permissible. The petitions are also opposed on the ground that the contract between the parties prescribe that the dispute between the parties arising from the contract would be subject to exclusive jurisdiction of civil court at Delhi and that therefore for want of territorial jurisdiction the subject petition may not be entertained. It is also claimed that the petitioners are bound by terms of the contract which include the obligation to pay price as may be fixed by respondent No.2 and respondent No.1 from time to time. The learned Counsel for respondent No.2 has submitted that the respondent No.2 has raised demand in view of the direction by respondent No.1 which are binding to respondent No.2 as well as the petitioners, being the consumers under the contract. It is submitted, inter alia, in light of the terms of the contract, that the respondents are entitled to revise the price and the said terms have been consciously accepted and are binding to the petitioners and that therefore the petitioners are now estopped from opposing and challenging demand in question. On the strength of terms of the contract it is contended that it is permissible to the government to issue instruction and direction with regard to the supply of gas as well as price of the gas and to revise it at any time and such change, by virtue of the terms of the contract, would be binding to the consumers. It is also claimed by the respondents that the petitions do not deserve to be entertained in view of the delay and latches. The learned Counsel would contend that the demand notices were raised way back in May 2012 and until now petitioners never challenged the said debit notices and that therefore now the petitioners are not justified and are estopped from challenging the debit notes, more particularly when the respondent No.2 has already invoked letter of credit submitted by petitioners under terms of the contract. It is further submitted that letter of credit have been invoked by respondents on behalf of all petitioners, vide letter dated 30.8.2012 and 4.9.2012.
6.4 Thus, essentially on the ground that the subject matter of the petitions is in realm of contract between the parties, the respondents have opposed the petitions whereas the petitioners have claimed that the contract and the dispute between the parties is also in the realm of public law and therefore the petitioners are justified in invoking provisions under Article 226 of the Constitution of India and preferring present petitions.
7. I have considered the submissions made by learned advocates appearing for the contesting parties and have examined the material available on record of present petitions.
8. The petitioners are consumers of gas which they require as fuel for their manufacturing units. The gas is supplied/sold to the petitioners by respondent No.2 under the contract entered into by and between respondent No.2 and respective petitioners.
8.1 For supply of gas, the petitioners have entered into contract with the respondent No.2. Under the contract, the petitioners are described as ‘buyers’ and the respondent No.2 is described as ‘seller’.
8.2 It is stipulated by learned Counsel for the contesting parties that the contracts with each of the petitioners are exactly identical except with regard to the changes so far as date of contract and the quantity i.e. Daily Contracted Quality are concerned. It is also stipulated that in all cases, the maximum contracted quantity is restricted to 0.05 MMSCMD and that all petitioners fall within the category of APM consumers.
8.3 The allocation/allotment of gas to the petitioners is determined by the Gas Linkage Committee and respondent No.2 is bound to follow the instructions as regards quantity of allocation to the consumers - petitioners, as may be determined by the allocation committee.
8.4 The quantity for supply and the quality specifications and the price of the product-commodity in question (viz. gas) are settled under and governed by the terms of the contract.
8.5 The terms of the contract for supply / sale of gas include the provision about allocated maximum quantity (for supply) assigned to each consumer - petitioners which the petitioner-consumer would be entitled to receive-draw.
The terms and conditions of the contract also prescribe calorific value – quality specifications.
The terms under the contract also prescribe the price at which the product-commodity would be sold/supplied and the period-tenure of contract.
8.6 The provisions under Article 10 of the contract, which deal with price, provide, inter-alia, that the seller has right to fix / revise the gas price at any time as per the directives, instructions, order, etc. of the Government of India i.e. respondent No.1 issued, from time to time.
Thus, in view of provisions contained under clause (b) of Article 10.1, the seller has right to revise the gas price at any.
8.7 According to the said Article 10.1 (b), if the seller revises gas price at any time, then the buyer, i.e. petitioners shall be obliged to pay such revised price.
8.8 It is pertinent that the contract also prescribes the terms and conditions applicable in event of overdrawl of gas by the consumers. The relevant provision is found under Articles 5.6(a), 5.6(c) and 5.6(d). The said Article 5.6 divides overdrawl of gas in two parts viz. “authorised overdrawl of gas” and “unauthorized overdrawl of gas”. Article 5.6(a) provides that unauthorized over drawl of gas shall be paid in the manner as provided under Article 5.6(c). Article 5.6(d) provides that seller, i.e. respondent No.2 may allow over drawl of gas in certain circumstances and such over drawl of gas would be treated as authorised over drawl. The contract has also provides dispute redressal mechanism for resolving disputes between the parties to the contract.
9. The factum of overdrawl i.e. additional supply beyond APM allocation is not in dispute, though, of-course, there would be disputes about the exact quantity treated by respondent No.2 as “additional supply beyond APM allocation” while the petitioners would claim that the total quantity supplied as “additional” quantity is actually less than what is measured by respondent No.2. However, as of now, in light of the provisions under the contract, the petitioners would contend that the additional over drawl of gas by the petitioners was in the category of authorised drawl of gas and even if it is to be presumed as unauthorized over drawl of gas, then also respondent No.2 is obliged to charge for such over drawl of gas in accordance with the provisions contained under clause (c) of Article 5.6.
9.1 The petitioners have approached essentially against the demand raised by respondent No.2 vide debit notes issued against the petitioners. From the details made available on record of present petitions it appears that debit notes have been issued by respondent No.2 against the petitioners on 22.5.2012 and subsequently vide another debit note dated 7.8.2012 demand for interest has been made. Before May, 2012 the petitioners were informed in April, 2010 that the additional supply beyond APM quantity will be charged at non-APM rates and the claim for past period i.e. from 1.7.2005 to 31.3.2010 will be informed subsequently.
9.2 The said debit notes have been followed by intimation invoking letter of credit.
9.3 It also appears from the details available on record that letters of credit have been invoked, in certain cases, on 30.8.2012 and in other cases letters of credit have been invoked on 4.9.2012. The petitions have been filed not only much after the intimation in April 2010 but also much after the debit notes were issued in May 2012.
9.4 It is in light of the said facts that learned Assistant Solicitor General of India for respondent has claimed that the petitions which have been filed after substantial delay, since date on which the demand notes were issued and served to the petitioners, do not deserve to be entertained.
9.5 The above mentioned aspects bring out and establish that:
(a) the relation between the petitioners and the respondent No.2 is contractual;
(b) The relation between the parties are governed and controlled by the terms of contract.
(c) The contract/s between the petitioners and the respondent No.2 are in the realm of private law;
(d) The contract/s between the petitioners and the respondent No.2 is purely commercial contract;
(e) The contract/s are not statutory contract/s and do not create statutory obligations.
(f) Contract/s are for supply, i.e. sale and purchase of specified product-commodity. Thus, the contract/s are governed by provisions under Contract Act and Sale of Goods Act;
(g) The price at which the product-commodity is to be supplied-sold is determined and agreed under the terms of contract;
9.6 The cause which has prompted and led the petitioners to file present petition is, inter alia, the action of respondent No.2 of issuing Demand Note/s seeking – enforcing recovery and payment of Non-APM rates for additional quantity of gas supplied beyond APM allocation during the period between 1.7.2005 to 31.3.2010.
9.7 It is claimed and alleged that the respondent No.2 has, unilaterally and in breach of the terms of contract, retrospectively revised-increased the price and retrospective recovery is being enforced. It is also contended on behalf of the petitioners that in view of the contract-agreement between the parties, the supply-sale of gas to the extent of contracted quantity (which is described and known as APM allocation) had to be made at APM rates and the supply made in certain specified circumstances even beyond APM allocation was also to be made at APM rates; however the respondent No.2 has demanded non-APM rates for supply of gas beyond APM-allocation and that the respondent is not right or justified or authorised to charge non-APM rates for supply-sale of gas beyond/in addition to the APM allocation and that the recovery sought to be made for past period, i.e. from July 2005 to March 2010 is impressible in view of the agreed terms of contract. Thus, the period in dispute in present petition is from 1.7.2005 to 31.3.2010.
9.8 It is also claimed that as and when it was possible for respondent No.2 to allocate and supply additional/excess quantity of gas beyond APM allocation and in respect of such additional supply of gas, invoices were raised by respondent No.2 in accordance with the provisions under the contract and respective petitioners have paid the said invoices.
9.9 The petitioners have also alleged that suddenly, after expiry of period of contract and with retrospective effect, the respondent No.2 has now, by virtue of debit notes, come forward with the demand for payment in respect of supply / drawl of gas beyond APM allocation at non-APM rates.
9.10 According to the petitioners, the demand amounts to change of terms of contract and that too unilaterally and with retrospective effect.
9.11 The petitioners have claimed that so far as invoices for regular supply of contracted quantity of gas are concerned, all such invoices are cleared by petitioners and that present petitioners do not involve or raise any dispute with regard to regular supply of contracted quantity of gas. It is claimed that even in respect of excess supply or over drawl of gas, the petitioners have paid invoices which were raised by respondent No.2 at the relevant time at APM rates.
9.12 It is claimed that the dispute has arisen only because of the respondent’s communication dated 19.4.2010 followed by the communication dated 23.5.2012 and the debit notes dated 22.5.2012 and 7.8.2012 whereby respondent No.2 has sought to retrospectively charge, demand and recover non-APM price from the petitioners in respect of excess supply/over drawl of gas i.e. supply beyond APM allocation for the period from 1.7.2005 to 31.3.2010.
9.13 The petitioners are disputing the said claim, demand and action / process of recovery by respondent No.2. So as to challenge the said actions the petitioners have, instead of invoking, having regard to the nature, cause and source of dispute and the contractual relations, ordinary civil remedy, invoked prerogative jurisdiction. The learned Assistant Solicitor General has raised objection against maintainability of writ petition on the ground that the dispute relates to and arises from and in view of the terms of the contract and that therefore writ petitions should not be entertained for adjudicating and resolving such dispute. Thus, the question arises as to whether present petitions are maintainable, having regard to the fact that dispute is raised in light of terms and conditions of the contract.
9.14 In this context it is also necessary to keep in focus, while considering aforesaid objection, that the respondent No.2 has already invoked letters of credit in pursuance of the debit notes issued by it in May 2012 followed by debit notes which came to be issued in August 2012.
The respondent No.2 would, so as to support and justify its action and demand, cite the terms of contract and submit that revision in price, “at any time” and “from time to time” is contemplated and is permissible under the contract.
9.15 Thus, the other aspects which emerge from the rival submissions are that:
(a) the relation between the petitioners and respondent No.2 is, undisputedly, contractual and the dispute between the parties are related to and arise from terms of contract; and
(b) the petitioners and the respondents are bound by the terms of the contract entered into between them. The relations are governed, controlled and directed by the terms and conditions of the contract.
(c) the foundation of petitions is alleged breach of terms of contract; and
(d) the real purpose and focal point and aim of the petitions is enforcing contractual rights and obligations arising from and related to the terms of contract; and
(e) the dispute and controversy are about claim and recovery of price,
(f) thus, the petitions are opposing monetary claim arising from the terms of contract and on account of supply- sale of gas made in terms of and under the contract;
(g) The petitioners allege and contend that the action and demand raised by the respondent No.2 is in breach of terms of contract, whereas the respondent No.2 claims that its acts and demand are in consonance with the terms of contract.
(h) thus, consideration of rival contentions call for examination of various terms of contract.
10. The question which arise in light of conflicting claims and rival submissions is whether the petitions invoking prerogative and discretionary writ jurisdiction are maintainable and do they deserve to be entertained in view of the facts of the petitions and in view of the nature of the dispute and controversy raised and involved in the petitions and in view of the real and actual purport and scope and nature of relief prayed for.
10.1 So as to seek reply to the said and other similar issues, it is appropriate and necessary to refer to the observations by the Apex Court in the decisions which explain the settled legal position on this count.
10.2 However, before taking into consideration the judicial pronouncements and precedents, it is necessary to address one aspect raised by the petitioners.
10.3 The learned Senior counsel for the petitioners have claimed that the grievance of the petitioners and consequently the petitions, contain ingredients of, and involve element, of public law and therefore public law remedy is available to them.
10.4 In the facts of the case, the submission cannot be accepted.
10.5 On this count, it is relevant and appropriate to note that merely because the impugned action is initiated by a limb or instrumentality of State or by the State itself, the said fact does not, automatically, inject public law element in such action. Like any private body or a person, State or its limb or statutory corporation are competent to enter into contract with private bodies, companies or individuals and such contract may be purely commercial or business contract without having any flavour or colour of statutory contract. All disputes which arise between the parties to such contract, which are not statutory contract or which do not give any rise to rights or obligation prescribed under statute, may not necessarily involve public law element merely on account of or in view of the fact that one of the parties to the contract is State or its instrumentality. Unless public law element is inherently involved in the dispute or in the case, public law remedy would not be available to the parties at the dispute and for adjudication or resolution of such dispute the parties at dispute should take recourse of ordinary civil remedy. Any strait jacket formula cannot be prescribed to determine as to whether public law element is inherently involved in the dispute on hand or not. It has to be decided on case to case basis and in context of the dispute, the parties at dispute and the effect of or involvement of public interest in such dispute and such other factors. Merely because relatively more number of persons are involved in or affected by the dispute or merely because one of the parties to the dispute is State or its limb, the dispute will not automatically be treated as dispute with public law element.
10.6 In present petitions, on perusal and examination of the contract, it emerges that the contracts between the petitioners and respondent No.2 are purely commercial – business contracts which have been entered into for sale and supply of gas as per the terms incorporated in the contract.
10.7 In this context, it is also relevant to note that the petitioners are, at-the-best a sub-class of consumers out of a class / category of consumers viz. industrial consumer inasmuch as respondent No.2 is selling/supplying gas to different categories and class of industrial consumers. The said industrial consumers comprise sub- class of consumers whose daily contracted quantity is restricted upto 0.05 MMSCMD under APM allocation. By the impugned action of respondent No.2 only said sub-class of consumers is affected. Furthermore the said consumers i.e. petitioners are engaged in commercial activities and are using gas as fuel in their manufacturing activity. Thus the contract/s are purely commercial contracts and dispute pertains to terms of such contract/s.
10.8 Dispute between such sub-class of consumers i.e. buyers and the supplier / seller of commodity product (viz. gas) which arise from application of and / or on account of the terms of contract for sale / supply of gas at agreed price cannot be categorized or treated as dispute affecting public interest or dispute involving or attracting public law elements. It is, therefore not possible to hold that the contract between the parties or the nature of dispute between the parties has any element or ingredient of public law.
10.9 The disputes raised in present group of petitions fall within the realm of private commercial contract between the parties and in light of the above mentioned characteristics of the contracts and the nature and scope of dispute, the contracts or the dispute do not involve public law element and merely because number of consumers affected by respondent No.2 are more or merely because the respondents are “state” and / or “instrumentality of state” and / or “instrumentality of State”, the disputes between the parties, which are in private law domain and arise from purely commercial contracts are not capable of being categorised as disputes in realm of public law or involving public law element.
10.10 This aspect can be considered from another perspective as well. Even if the contentions based on public law aspect were to be accepted, then also it would be applicable or available only until the stage of allocation / allotment of the supply of gas to similarly situated consumers / applicants but not after the allocation / allotment of gas is finalized and the price at which the gas will be supplied / sold is also finalized by and under contract/s which contain specific clause allowing revision / increase of price and which are composite in almost all respects related to the sale and purchase of gas, are entered into and executed.
10.11 Once the allocation is finalized and composite contract/s dealing with all relevant aspects (e.g. maximum quantity, quality, price, period of invoice, time limit within which payments should made, dispute resolution mechanism etc.) are entered into, then the disputes, related and / or arising from such contact and the terms thereof would be purely commercial contract and would be governed by private law, and would not partake character of, or involve element of public law and that therefore such contract/s and disputes can be and should be examined and decided in light of provisions under relevant and applicable law e.g. Contract Act and Sale of Goods Act.
10.12 In this context it would not be out of place to refer to the observations by the Apex Court in case of DLF Universal Properties and Industries v. Director, T & C Planning, Haryana (AIR [2011] SC 1463) wherein the Apex Court has observed that:-
42...............The question as to whether the cost of the plot includes the maintenance charges may have to be decided on a proper interpretation of the terms and conditions of the agreement. The court in a public law remedy cannot undertake the task of resolving disputes arising out of a contract for such disputes as they essentially lie in the private law domain.
Thus, even in cases where public law remedy is available and permissible, the Court would not entertain disputes arising out of a contract since such disputes lie in domain of private law.
10.13 Examination of the contract and its terms and conditions also give out that the contracts between the petitioners and respondent No.2 are not statutory contracts and any statutory duty is not cast on the respondent nor any statutory right is crated in favour of the petitioners.
10.14 On examinations of petitions and from the submissions by the learned Senior Counsel for petitioners it emerges that the petitions are preferred for enforcement of contractual rights and obligations and they involve issues about breach of terms of contract and interpretations of the terms of contract and the dispute falls within realm of private commercial contracts between the parties.
10.15 When the dispute involved in the petition relates to contractual matter and/or gives rise to interpretation of the terms of the contract, then prerogative writ proceedings would not be proper remedy and the appropriate remedy for such dispute would be ordinary civil remedy.
10.16 Ordinarily, writ court would not entertain petitions wherein the petitioners seek performance of contractual obligation and/or disputes or claims which arise from and / or are related to and / or the terms of the contract or the issues involve / require interpretation of the terms of contract. In this context, as mentioned earlier, it would be relevant and appropriate to refer to relevant observations by the Apex Court.
In decision in case of Kulchhinder Singh vs. Hardayal Singh Brar [AIR 1976 SC 2216], the Apex Court has observed that:
“11. There is no doubt that the some of the legal problems argued by Sri Ramamurthy deserve in an appropriate case jurisprudential study in depth, although much of it is covered by authority. But assuming, for argument's sake, that what he urges has validity, the present case meets with its instant funeral from one fatal circumstance. The writ petition, stripped of embroidery and legalistics, stands naked as a simple contract between the staff and the Society, agreeing upon a certain percentage of promotions to various posts or an omnibus, all-embracing promise to give a quota to the existing employees. At its best, the writ petition seeks enforcement of a binding contract but the neat and necessary repellant is that the remedy of Article 226 is unavailable to enforce a contract qua contract. We fail to see how a supplier of chalk to a Government school or cheese to a Government hospital can ask for a constitutional remedy under Art. 226 in the event of a breach of a contract, by-passing the normal channels of civil litigation. We are not convinced that a mere contract agreeing to a quota of promotions can be exalted into a service rule or statutory duty. What is immediately relevant is not whether the respondent is State or public authority but whether what is enforced is a statutory duty or sovereign obligation or public function of a public authority. Private law may involve a State, a statutory body, or a public body in contractual or tortious actions. But they cannot be siphoned off into the writ jurisdiction.
12. The controversy before us in substance will turn on the constructions and scope of the agreement when the claim to a quota as founded cannot be decided in writ jurisdiction without going back on well-settled guidelines and even subverting the normal processual law - except perhaps in extreme cases which shock the conscience of the Court or the other extraordinary situation an aspect we are not called upon to explore here. We are aware of the wide amplitude of Art. 226 and its potent use to correct manifest injustice but cannot agree that contractual obligations in the ordinary course, without even statutory complexion, can be enforced by this short, though, wrong cut.” (emphasis supplied) It would be appropriate to refer, in this context, to the decision by the Hon’ble Apex Court in case of Radhakrishna Agarwal vs. State of Bihar [(1977) 3 SCC 457] “12. The Patna High Court had, very rightly, divided the types of cases in which breaches of alleged obligation by the State or its agents can be set up into three types. These were stated as follows:
(i) Where a petitioner makes a grievance of breach of promise on the part of the State in cases where on assurance or promise made by the State he has acted to his prejudice and predicament, but the agreement is short of a contract within the meaning of Article 299 of the Constitution;
(ii) Where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under certain Act or Rules framed thereunder and the petitioner alleges a breach on the part of the State; and
(iii) Where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract, and the petitioner complains about breach of such contract by the State.
13. It rightly held that the cases such as Union of India v. M/s Anglow- Afgan Agencies and Century Spinning & Manufacturing Co. Ltd. v. Ulhasnagar Municipal Council and Robertson v. Minister of Pensions, belong to the first category where it could be held that public bodies or the State are as much bound as private individuals are to carry out obligations incurred by them because parties seeking to bind the authorities have altered their position to their disadvantage or have acted to their detriment on the strength of the representations made by these authorities. The High Court thought that in such cases the obligation could sometimes be appropriately enforced on a Writ Petition even though the obligation was equitable only. We do not propose to express an opinion here on the question whether such an obligation could be enforced in proceedings under Article 226 of the Constitution now. It is enough to observe that the cases before under Section do not belong to this category.
14. The Patna High Court also distinguished cases which belong to the second category, such as K.N. Guruswamy v. The State of Mysore; D.F.O. South Kheri v. Ram Sanehi Singh and M/s Shri Krishna Gyanoday Sugar Ltd. v. The State of Bihar, where the breach complained of was of a statutory obligation. It correctly pointed out that the cases before under Section do not belong to this class either.
15. It then, very rightly, held that the cases now before under Section should be placed in the third category where questions of pure alleged breaches of contract are involved. It held, upon the strength of Umakant Saran v. The State of Bihar and Lekhraj Satramdas v. Deputy Custodian- cum-Managing Officer and B.K. Sinha v. State of Bihar, that no writ or order can issue under Article 226 of the Constitution in such cases “to compel the authorities to remedy a breach of contract pure and simple”. (emphasis supplied)
16. ..................
17. ..................
18. ..................
19. We do not think that any of these cases could assist the appellants or is at all relevant. None of these cases lays down that, when the State or its officers purport to operate within the contractual field and the only grievance of the citizen could be that the contract between the parties is broken by the action complained of, the appropriate remedy is by way of a petition under Article 226 of the Constitution and not an ordinary suit. There is a formidable array of authority against any such a proposition. In Lekhraj Satramdas Lalvani v. N.M. Shah, Deputy Custodian-cum-Managing Officer, Bombay (supra) this Court said:
In our opinion, any duty or obligation falling upon a public servant out of a contract entered into by him as such public servant cannot be enforced by the machinery of a writ under Article 226 of the Constitution.
In Banchhanidhi Rath v. The State of Orissa, this Court declared: If a right is claimed in terms of a contract such a right cannot be enforced in a writ petition.
In Har Shankar v. The Deputy Excise & Taxation Commissioner, a Constitution Bench of this Court observed:
The appellants have displayed ingenuity in their search for invalidating circumstances but a writ petition is not an appropriate remedy for impeaching contractual obligations.” (emphasis supplied) In decision in case of Bareilly Development Authority vs. Ajay Pal Singh [AIR 1989 SC 1076], the Apex Court has, in paras 21 and 22, observed that:
“21...........................
22. In view of the authoritative judicial pronouncements of this Court in the series of cases dealing with the scope of interference of a High Court while exercising its writ jurisdiction under Article 226 of the Constitution of India in cases of non-statutory concluded contracts like the one in hand, we are constrained to hold that the High Court in the present case has gone wrong in its finding that there is arbitrariness and unreasonableness on the part of the appellants herein in increasing the cost of the houses/flats and the rate of monthly installments and giving top, directions in the writ petitions as prayed for.
The above quoted observations in the said decision, are made in backdrop of the facts which are mentioned in para 16 of the said judgment, which read thus:
“16. Only on the basis of the written acceptance, the name of the first respondent was included in the draw and he has (was) successful in getting the allotment of House No. 37 in MIG type which fact is clearly borne out by the letter from the second respondent (Annexure 'F'). In this connection, it is worthwhile to note that the first respondent, Shri Ajay Pal Singh is the Principal of Shri Guru Govind Singh Inter College and his educational qualifications are MA (Econ. and Hist.), B.Sc. B. Ed. LL.B. From the above, it is clear that all the respondents who have sent their applications for registration with initial payment only after having fully understood the terms and conditions of the brochure inclusive of the Clauses 12 and 13 and Notes 1 and 2 of the General Information Table as per which the BDA has reserved its right to change enhance or amend any of the terms and or conditions as and when felt necessary and also the right to relax any of the condition at its discretion, and that the cost shown in the column 4 of the brochure was only estimated cost subject to increase or decrease according to the rise or fall in the price at the time of completion of the property. This is not only the case of the applicants of MIG scheme but also of the other applicants falling under the other categories i.e. HIG, LIG and EWS. So it cannot be said that there was a mis-statement or incorrect statement or any fraudulent concealment in the information supplied in the brochure published by the BDA on the strength of which all the applicants failing under the various categories applied and got their names registered. In such a circumstance the respondents cannot be heard to say that the BDA has arbitrarily and unreasonably changed the terms and conditions of the brochure to the prejudice of the respondents.”
In decision in case of State of Gujarat & Ors. Vs. Meghji Petharaj Shah Charitable Trust & Ors. [(1994) 3 SCC 552, the Apex Court has observed, inter-alia, that:-
‘if the matter is governed by a contract, writ petition is not maintainable since it is a public law remedy and is not available in private law field, e.g., where the matter is governed by a non-statutory contract’.
In decision in case of State of U.P. & Ors. Vs. Bridge & Roof Co. (India) Ltd. [AIR 1996 SC 3515], the Apex Court has observed that:
“15. In our opinion, the very remedy adopted by the respondent is misconceived. It is not entitled to any relief in these proceedings, i.e. in the writ petition filed by it. The High Court appears to be right in not pronouncing upon any of the several contentions raised in the writ petition by both the parties and in merely reiterating the effect of the order of the Deputy Commissioner made under the proviso to Section 8-D (1).
16. Firstly, the contract between the parties is a contract in the realm of private law. It is not a statutory contract. It is governed by the provisions of the Contract Act or, may be, also by certain provisions of the Sale of Goods Act. Any dispute relating to interpretation of the terms and conditions of such a Contract cannot be agitated, and could not have been agitated, in a writ petition. That is a matter either for arbitration as provided by the contract or for Civil Court, as the case may be. Whether any amount is due to the respondent from the appellant- Government under the contract and, if so, how much and the further question whether retention or refusal to pay any amount by the Government is justified, or not, are all matters which cannot be agitated in or adjudicated upon in a writ petition. The prayer in the writ petition, viz., to restrain the Government from deducting particular amount from the writ petitioners' bill(s) was not a prayer which could be granted by the High Court under Article 226. Indeed, the High Court has not granted the said prayer.
17. Secondly, whether there has been a reduction in the statutory liability on account of a change in law within the meaning of sub-clause (4) of Clause 70 of the Contract is again not a matter to be agitated in the writ petition. That is again a matter relating to interpretation of a term of the contract and should be agitated before the arbitrator or the Civil Court, as the case may be. If any amount is wrongly withheld by the Government, the remedy of the respondent is to raise a dispute as provided by the contract or to approach the Civil Court, as the case may be, according to law. Similarly if the government says that any over- payment has been made to the respondent, its remedy also is the same.” (emphasis supplied) The same analogy would apply if amount is allegedly wrongly demanded or revised / additional payment is claimed, and demand is sought to be opposed. All these aspects would involve interpretation of terms of contract.
In decision in case of India Thermal Power Ltd. vs. State of M.P. & Ors. [(2000) 3 SCC 379], the Apex Court has, in para 11, observed that:
“11. It was contended by Mr Cooper, learned Senior Counsel appearing for appellant GBL and also by some counsel appearing for other appellants that the appellant/IPPs had entered into PPAs under Section 43 and 43-A of the Electricity Supply Act and as such they are statutory contracts and, therefore, MPEB had no power or authority to alter their terms and conditions. This contention has been upheld by the High Court. In our opinion the said contention is not correct and the High Court was wrong in accepting the same. Section 43 empowers the Electricity Board to enter into an arrangement for purchase of electricity on such terms as may be agreed. Section 43-A(1) provides that a generating company may enter into a contract for the sale of electricity generated by it with the Electricity Board. As regards the determination of tariff for the sale of electricity by a generating company to the Board, Section 43(1)(2) provides that the tariff shall be determined in accordance with the norms regarding operation and plant-load factor as may be laid down by the authority and in accordance with the rates of depreciation and reasonable return and such other factors as may be determined from time to time by the Central Government by a notification in the Official Gazette. These provisions clearly indicate that the agreement can be on such terms as may be agreed by the parties except that the tariff is to be determined in accordance with the provision contained in Section 43-A(2) and notifications issued thereunder. Merely because a contract is entered into in exercise of an enabling power conferred by a statute that by itself cannot render the contract a statutory contract. If entering into a contract containing the prescribed terms and conditions is a must under the statute then that contract becomes a statutory contract. If a contract incorporates certain terms and conditions in it which are statutory then the said contract to that extent is statutory. A contract may contain certain other terms and conditions which may not be of a statutory character and which have been incorporated therein as a result of mutual agreement between the parties. Therefore, the PPAs can be regarded as statutory only to other statutory requirements of Section 43-A(2). Opening and maintaining of an escrow account or an escrow agreement are not the statutory requirements and, therefore, merely because PPAs contemplate maintaining escrow accounts that obligation cannot be regarded as statutory.” (emphasis supplied) In decision in case of Kerala State Electricity Board & Anr. Vs. Kurien E. Kalathil & Ors. [AIR 2000 SC 2573], the Apex Court has observed that:
“8. Elaborating the first submission, learned counsel for the appellant submits that the dispute relating to interpretation of a clause in a contract and implementation of such clause cannot be made subject matter of a writ petition and remedy of the aggrieved person lies in approaching the Civil Court or some other appropriate forum. It was further contended that all contracts entered into by a body whose existence may be governed by the provisions of a statute are not statutory contracts.
9. .......
10. We find that there is a merit in the first contention of Mr. Rawal. Learned counsel has rightly questioned the maintainability of the writ petition. The interpretation and implementation of a clause in a contract cannot be the subject-matter of a writ petition. Whether the contract envisages actual payment or not is a question of construction of contract? If a term of a contract is violated, ordinarily the remedy is not the writ petition under Article 226. We are also unable to agree with the observations of the High Court that the contractor was seeking enforcement of a statutory contract. A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. We are also unable to agree with the observation of the High Court that since the obligations imposed by the contract on the contracting parties come within the purview of the Contract Act, that would not make the contract statutory. Clearly, the High Court fell into an error in coming to the conclusion that the contract in question was statutory in nature.
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 of 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. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a petition under Article 226 of the Constitution of India. That is a matter for adjudication by a civil Court or in arbitration if provided for in the contract. Whether any amount is due and if so, how much and refusal of the appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have been relegated to other remedies.
12 ” (emphasis supplied) In decision in case of N.T. Abraham vs. State of Kerala & Ors. [AIR 2000 SC 3459], the Apex Court has observed that:
“3. The High Court has rightly come to the conclusion that the dispute between the parties is of a civil nature which has to be agitated in an appropriate Forum. Whether there has been a bona fide mistake or not in paying the excess amount to the appellant and whether the appellant is entitled to retain the said amount of Rs. 1,59,939.75 or not are all matters which have to be decided under civil law and these disputes cannot be decided under Art. 226 of the Constitution of India.” (emphasis supplied) In decision in case of Asgar S. Patel Vs. Union of India [AIR 2000 SC 2222], the Apex Court has observed that:
“21. … … … When the parties enter into a clear, unambiguous and express contract creating mutual rights and obligations, the parties are bound by it and the extraordinary jurisdiction of the High Court under Article 226 of the Constitution which is of a discretionary nature cannot be allowed to be utilized for enforcing an obligation in departure from the terms of the agreement.”
In decision in case of State of Bihar vs. Jain Plastics and Chemicals Ltd. [AIR 2002 SC 206], the Apex Court has observed that:
“2. Limited question involved in this appeal is - whether the High Court ought not to have exercised its jurisdiction under Article 226 of the Constitution of India for granting relief in case of alleged breach of contract.
3. Settled law - writ is not the remedy for enforcing contractual obligations. It is to be reiterated that writ petition under Article 226 is not the proper proceeding 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.
7. In our view, it is apparent that the order passed by the High Court is on the face of it illegal and erroneous. 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 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 investigated and determined on the basis of evidence which may be led by the parties in an properly instituted civil suit rather than by a Court exercising prerogative of issuing writs.”
(emphasis supplied) In decision in case of National Highways Authority of India vs. Ganga Enterprises [(2003) 7 SCC 410], the Apex Court has observed that:-
“It is settled law that disputes relating to contracts cannot be acted under Article 226 of the Constitution of India...........They were thus contractual disputes in respect of which a writ court was not the proper forum “ In case of National Textile Corporation Ltd. vs. M/s Haribox Swalram & Ors. [JT 2004 (4) SC 508], wherein the Apex Court has, in para 17, of the said decision, observed that:
“17 That apart, the prayer made in the writ petition is for issuance of a writ of mandamus directing the appellant herein to supply the goods (cloth). It is well settled that in order that a mandamus be issued to compel the authorities to do something, it must be shown that there is a Statute which imposes a legal duty and the aggrieved party has a legal right under the Statute to enforce its performance. The present is a case of pure and simple business contract. The writ petitioners have no statutory right nor any statutory duty is cast upon the appellants whose performance may be legally enforced. No writ of mandamus can, therefore, be issued as prayed by the writ petitioners.” (emphases supplied) In the decision in case of Orissa Agro Industries Corporation Ltd. & Ors. vs. Bharati Industries & Ors. [AIR 2006 SC 198], the Apex Court has observed that:
“9. 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 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.” (emphasis supplied) In the decision in case between Mrs. Satimbla Sharma vs. St.Paul's Senior Secondary School [AIR 2011 SC 2926] the Hon'ble Apex Court has observed that:-
“11.................... Where a statutory provision casts a duty on a private unaided school to pay the same salary and allowances to its teachers as are being paid teachers of Government aided schools, then a writ of mandamus to the school could be issued to enforce such statutory duty. But in the present case, there was no statutory provision requiring a private unaided school to pay to its teachers the same salary and allowances as were payable to teachers of Government schools and therefore a mandamus could not be issued to pay to the teachers of private recognized unaided schools the same salary and allowances as were payable to Government institutions.
12. ...........
13. We cannot also issue a mandamus to respondent nos.1 and 2 on the ground that the conditions of provisional affiliation of schools prescribed by the Council for the Indian School Certificate Examinations stipulate in clause (5)(b) that the salary and allowances and other benefits of the staff of the affiliated school must be comparable to that prescribed by the State Department of Education because such conditions for provisional affiliation are not statutory provisions or executive instructions, which are enforceable in law. Similarly, we cannot issue a mandamus to give effect to the recommendations of the report of Education Commission 1964-66 that the scales of pay of school teachers belonging to the same category but working under different managements such as government, local bodies or private managements should be the same, unless the recommendations are incorporated in an executive instruction or a statutory provision. We, therefore, affirm the impugned judgment of the Division Bench of the High Court.”
This Court, recently, in decision dated 16.8.2012 in Special Civil Application No.3625 of 2012 in case between Shyam Sel & Power Limited vs. Stat of Gujarat, observed that in case where question of alleged breach of contract and/or action in accordance with terms of contract are involved, then writ court would not be justified in entertaining the writ petition and the parties ought to be relegated to ordinary civil remedy.
11. In present case, it is noticed that the contract contains a specific provision which authorizes and empowers the respondent No.2 to revise the price of gas at any time. The petitioners have claimed that they were supplied additional quantity of gas, i.e. quantity beyond APM allocation and it is required to be charged in accordance with terms of the contract. What follows and emerges from the factual aspect is that respondent No.2 had allowed drawl of gas under the terms of contract and invoices were raised under the terms of the contract and subsequently the price came to be revised which also is said to have been done in accordance with the terms of the contract viz. Article 10.1(b) which, as claimed the respondents allows respondent No.2 to revise gas price at any time. It emerges from the record that under its communication dated 9.2.2010, the respondent No.1 had informed respondent No.2 that:
“2. It has been clearly mentioned in the pricing order issued vide Ministry letter No.L.12015/4/GP(i) dated 20.6.2005 that APM gas has to be supplied against existing allocations. Hence, it is obvious that supply of APM gas of APM rate is limited to the extent of APM allocation made by the erstwhile GLC. Any supply beyond APM allocation would have to be made at non-APM rates as determined by the Government. This is only an implementation of the pricing order dated 20.6.2005 and, accordingly, needs to be implemented from the date of applicability of that order, viz. 01.07.2005. Hence GAIL should immediately switch to charging non APM price for supplies beyond APM allocation. Meanwhile, the amount due from 1.7.2005 may be worked out and recovered by GAIL.
11.1 It also emerges from the record that respondent No.2 had, thereafter, issued and served to the petitioners, a letter dated 19.4.2010 whereby respondent No.2 had informed all petitioners that non-APM rate shall be charged for APM gas supplied beyond APM allocation and the respondent No.2 shall work out the differential amount due for the APM gas supplied beyond APM allocation and that shall be informed to the consumers-petitioners. Thus, it was in April 2010, that the petitioners-consumers were informed by respondent No.2 that in respect of gas supply beyond APM allocation, non-APM rates shall be applied.
11.2 Despite such intimation way back in April 2010, until now the petitioners did not take any action and now after almost two years the petitioners have brought under challenge the said decision (of the respondents) when respondent No.2 has invoked the letters of credit and intimations have been sent to the banks.
11.3 The above mentioned aspects are also relevant and need to be taken into account while considering the issue about maintainability of petitions and justification, if any, to exercise the discretion and prerogative jurisdiction.
11.4 Moreover, what is also relevant to note is the fact that with effect from 1.4.2010, respondent No.2 has been applying non-APM rates to the petitioners-consumers for gas supplied beyond APM allocations and the petitioners-consumers have been making payment at non-APM rates for the gas supplied beyond APM allocations.
12. Thus, the decision and action of respondent No.2 of applying non-APM rates to the gas supplied beyond APM allocation has been accepted by the petitioners-consumers with effect from 1.4.2010 but dispute is raised, in respect of the demand for the period from 1.7.2005 to 30.3.2010.
13. Learned counsel for the petitioners have relied on the communication dated 9.1.2006 (page 127) and while relying on the said communication, it is claimed that respondent No.1 had, at the relevant time, clarified that when some consumers stopped availing APM gas and such available gas is supplied to other consumers, then it will be treated as APM gas in terms of contract and that, therefore, the respondents are not justified in applying non-APM gas supplied to the petitioners on account of availability of excess gas on account of non-drawl by some of the APM consumers.
13.1 As against the said contention, the respondents rely on the provision contained under Article 10 of the contract and would claim that the terms of the contract allow and empower the respondents to revise the price at any time and that, therefore, the petitioners’ contention is contrary to the terms of the contract.
13.2 Learned counsel appearing for the petitioners have tried to distinguish the facts of the case on the ground that the impugned action of the respondents is not purely matter of private law but it has element and ingredients of public law. Mr. Soparkar, learned Senior Counsel and Mr. Joshi, learned Senior Counsel appearing for the petitioners relied on the decision in case between Union of India vs. Tantia Construction Pvt. Ltd. (2011 [5] SCC 697). In the said decision the Hon'ble Apex Court considered the objection against the maintainability of writ petition on account of alternative remedy viz. arbitration clause in the contract. However in present case the Court is not inclined to entertain writ petitions or to allow the petitioners to invoke prerogative and discretionary writ jurisdiction for the above discussed reasons including the reason that the parties are tied in contractual relation and the dispute between the parties are related to and have arisen from the terms of the contract or alleged breach of contract or for enforcement of terms of contract and the disputes also involve monetary claim. Therefore said decision does not assist the petitioners in present case.
In the decision in case of Food Corporation of India vs. SEIL Ltd. and others (2008 [3] SCC 440) the Hon'ble Apex Court noticed that the appellant had withheld payment to the respondent without any legal justification although direction to make payment was issued. In the facts of the case, in the said decision, the Apex Court found that the writ petition ought to have been entertained because the petitioner (i.e. the respondent before the Apex Court) was entitled, in law as well as in equity, for the claim made by it. The Apex Court, having reached such conclusion did not entertain appeal against decision by High Court entertaining petition.
The reliance placed on the decision by the Apex Court in case of LIC of India vs. ESCORTS Limited (1986 (1) SCC 264) does not help the petitioners in view of the fact of present petitions which are materially different form the facts of the cited case. Not only this but the nature and scope as well as canvass of the issues raised in the said case before the Apex Court were different but of much wider scope and amplitude which do not exist with present case. Moreover in the said decision also the Hon'ble Apex Court observed, inter alia, that when State or its instrumentality is engaged in ordinary commercial transaction like the private person and not in capacity of State, private law would be applicable and its action would not be questionable on grounds or arbitariness or unreasonableness or on ground of Article 14 of the Constitution of India. Therefore, said decision does not assist the case of the petitioners.
Likewise, the decision by Apex Court in case of Bharat Sanchar Nigam Limited vs. BPL Mobile Cellular ltd. (AIR 2009 SC 1005) also would not assist the case of petitioners inasmuch as the said case involved and raised issues about rights and liabilities of the parties which were prescribed under the Telegraph Act, 1885 and Telegraph Rules 1951. In the said case by circular / letter minimum guarantee period was changed in absence of any provision in the contract. In present case, the respondents have claimed that the provision under Article 10 confers power to revise price at any time and it is in exercise of such powers that the impugned decision and action have been taken. Thus, in present case the dispute involved interpretation and construction of the terms of the contract.
13.3 The said contention, in the facts of present group of petitions, cannot be accepted. Once the terms and conditions are settled between the parties and are incorporated in and form part of the contract which is duly entered into and executed by and between the parties to the contract, then the relations between the parties would be governed by the terms and conditions of the contract and the relations between the parties to the contract will be purely contractual relations and from that stage onwards they would be governed by and would be part of private law and will not attract principles of public law.
14. The petitions, in effect, are aimed at enforcing contractual rights and obligations and the grievance raised by the petitioners in present petitions is based on allegation of breach of terms of contract.
14.1 In view of the observation by the Apex Court in the above referred decisions which have been emphasized by the Apex Court in various subsequent decisions as well, this Court is of the view that since the petitioners and the respondent No.2 are tied in contractual relation by virtue of contract/s which are purely commercial contracts and operate in private domain and since the petitions arise from the terms of contract and in view of the allegations about breach of terms of contract or enforcement of contractual rights and obligations the petitions also require interpretation of terms and conditions of the contract.
14.2 The subject petitions (as observed by the Apex Court in the above referred decisions) do not deserve to be entertained in exercise of prerogative and discretionary writ jurisdiction under Article 226 of the Constitution. Whether the demand and recovery is justified or not and whether in light of the terms of the contract, it can be made or not are the issues which cannot be agitated and decided in a writ petition. The writ proceedings and the writ remedy are not appropriate remedy for present petitions. As observed by the Apex Court, ‘the disputes about meaning of covenant in contract or its enforceability have to be determined according to the usual principles of Contract Act’.
15. It is clarified that since the Court is of the view that having regard to the nature and scope of the dispute and controversy raised in the petition, writ remedy is not available and the petitions do not deserve to be entertained the Court has not entered into merits of, and has not expressed any opinion as regards, the contentions raised by the petitioners and/or meaning and scope or effect of the terms of contract and / or about explanation tendered by the respondents including the contentions with reference to the specific terms of contract e.g. provisions contained under Articles 5 and/or 10 and/or 12, etc, lest the observations may affect the proceedings before the appropriate forum and / or they may be construed as opinion of the Court.
16. It is also clarified that the observations made in present order with reference to the aspects related to the contract and/or respective rights/objections are only prima facie observations made for the purpose of present order and will not stand in way of the petitions in appropriate proceedings which may be taken out by the present petitioners.
17. On overall consideration of the facts of the case, the nature and scope of the dispute and controversy as well as the rival claims and contentions and on examination of the terms of contract/s, it emerges that the petitions also involve monetary claim and the contracts between the parties are governed by private law since the contracts are commercial contracts in contradistinction to statutory contracts and that, therefore, also the invocation of writ jurisdiction for such dispute and controversy is not justified and is not available. Therefore, the Court is not inclined to entertain the petitions.
18. In view of the above discussions and for the foregoing discussions and reasons, the Court is of the view that in the facts of the case on hand the petitions do not deserve to be entertained and the petitioners are required to be relegated to ordinary civil remedy instead of permitting them to invoke prerogative and discretionary writ jurisdiction. Therefore, the petitions are not accepted and entertained. Accordingly the petitions are disposed of. Notices are discharged. In the facts of the case there shall be no order of cost.
19. In view of the total number of matters on the daily cause list, the dictation of the order could be undertaken only during twilight hours of court working. Therefore, the dictation had to be continued on 20.9.2012, 24.9.2012, 25.9.2012 and it would be concluded on 26.9.2012 (on 21.9.2012 the petitions could not be taken up for dictation of this order).
(K.M.THAKER,J.) Suresh*