2014 (9) TMI 384 - HC - Indian Laws

Writ petition for for recovery of money - to enforce contractual obligation - bills against the services provided by the appellant were not cleared and the payments withheld ―due to some audit objections - period of limitation - Held that - The said period of three years expired with respect to the first two bills on 26th April, 2002 and for the third bill on 22nd July, 2002. There is nothing to show that the date of payment was agreed to be any other. The writ petition seeking mandamus was filed only on 28th September, 2007. There is nothing to show any acknowledgment of liability within the meaning of Section 18 of the Limitation Act. We have thus wondered whether money claim, suit for which had become barred by time/limitation, can be allowed in writ jurisdiction. The answer obviously is no. - merely because the time barred claim of another has been allowed does not constitute a reason for allowing another time barred claim - Decided against the assessee. Public law remedy under Article 226 of the Constitution of India is not available to seek damages for breach of contract or specific performance of contract unless the contractual dispute has a public law element. - the powers under Article 226 are to be exercised by applying the Constitutional provisions and judicial guidelines and violation, if any of the fundamental rights and the Court would be reluctant to exercise the power of judicial review in rights on the basis of contracts. It was further held that a contract would not become statutory simply because it has been awarded by a statutory body. - writ petition to enforce the contractual claim was not maintainable and more so when the claim was barred by time.

Summary

Issues Involved:
1. Maintainability of writ petition for contractual claims.
2. Bar of limitation on the claim.
3. Non-payment due to audit objections.
4. Comparison with similar cases (e.g., M/s. Punjabi Tent House).
5. Public law element in contractual disputes.

Issue-wise Detailed Analysis:

1. Maintainability of Writ Petition for Contractual Claims:
The respondents filed a writ petition seeking payment for services rendered. The appellants contended that the writ petition was not maintainable for contractual claims and that the appropriate remedy was a suit for recovery of money. The court noted that normally, a writ petition under Article 226 is not entertained for enforcing civil liabilities arising out of a breach of contract. The Supreme Court has held that contractual obligations are beyond the zone of judicial review unless there is a public law element involved.

2. Bar of Limitation on the Claim:
The appellants argued that the claim was barred by limitation as the payments pertained to the period 1999-2000, and the writ petition was filed in 2007. The court observed that under Article 12 of the Limitation Act, the limitation for recovery of hire charges was three years from the date the hire became payable. The respondents' claims were time-barred as there was no acknowledgment of liability within the meaning of Section 18 of the Limitation Act. The court reiterated that extraordinary remedies under the Constitution are not intended to enable the claimant to recover monies barred by limitation.

3. Non-payment Due to Audit Objections:
The respondents claimed that their payments were withheld due to audit objections. The learned Single Judge found that the Directorate of Education was not justified in withholding payments without conducting any inquiry into the complaints about the quality of work. However, the appellate court noted that the respondents failed to provide substantial evidence to prove that the work orders were placed pursuant to a tender enquiry or that an agreement was executed.

4. Comparison with Similar Cases (e.g., M/s. Punjabi Tent House):
The respondents argued that their case was similar to that of M/s. Punjabi Tent House, which had been paid after filing a writ petition. The court noted that the respondents waited for more than three years after the decision in the Punjabi Tent House case to file their petition. The court emphasized that a wrong decision in another case cannot constitute a precedent for allowing other time-barred claims.

5. Public Law Element in Contractual Disputes:
The court examined whether the dispute had a public law element, which could justify the invocation of writ jurisdiction. It was concluded that the present case did not involve any public law element. The Supreme Court has held that a writ petition in contractual matters would be entertained only if there is an element of public interest. The court found no such element in the present case.

Conclusion:
The appellate court allowed the appeal, setting aside the order dated 23rd March 2010, which had directed the appellants to release the payment to the respondents. The writ petition filed by the respondents was dismissed on the grounds that it was not maintainable for enforcing a contractual claim, especially when the claim was barred by limitation. No order as to costs was made.