Full Judgment Text
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6086 OF 2015
(@ SLP(C) NO. 19380 OF 2014)
State of Kerala & Ors. ... Appellants
Versus
M.K. Jose ... Respondent
J U D G M E N T
Dipak Misra, J.
The present appeal, by special leave, assails the
correctness of the judgment dated 24.02.2014 passed by the
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High Court of Kerala at Ernakulam in W.A. No. 1912/2013
whereby the Appellate Bench has reversed the decision of
the learned Single Judge rendered in W.P.(C) No. 22541 of
2013 whereunder he had declined to interfere with the order
of the Secretary, Public Works Department, Road and
Projects of the State terminating the contract awarded to the
respondent and forfeiting the security deposit placed by the
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contractor for the work to the state and further stating that
the work had been put an end to at the cost and risk of the
contractor.
2. Exposition of facts with essential details is imperative
to appreciate the controversy in proper perspective and also
to consider the manner in which the Appellate Bench has
exercised the writ jurisdiction under Article 226 of the
Constitution in respect of a matter relating to termination of
contract. The respondent was awarded the work, namely,
“Stimulus package-improvements to
Kannavam-Idumba-Trikadaripoyil Road Km. 0/000 to
9/100 in Kannur District” and accordingly an agreement
was executed between the parties on 18.12.2010. The site
for the work was handed over to the respondent on
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27.12.2010 and the work was to be completed within a
period of 12 months. Thus, the work, as requisite, under
the terms of the contract was to be completed in all respects
as on 26.12.2011. The respondent could not complete the
work in time and on a request being made, time was initially
extended up to 30.06.2012 and thereafter further extension
was granted upto 31.03.2013.
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3. As is perceptible from the order of termination of the
contract, despite issue of several notices and instructions,
the contractor failed to complete the work even during the
extended period. The Executive Engineer of the Department
issued a memorandum on 14.02.2013 stopping the work.
As there was some deviation of work, the revised estimate
was required to be done but the same was not sanctioned
by the Government. At that juncture, the respondent
preferred W.P.(C) No. 5672 of 2012 seeking appropriate
direction to the Government to pass orders sanctioning the
revised estimate. The High Court disposed of the writ
petition directing the Principal Secretary to take a decision
on the proposal of revised estimate. Thereafter, the
respondent filed a contempt petition which was eventually
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dropped.
4. As the factual matrix would further unfurl, the
respondent submitted a representation to the Government
and thereafter filed W.P.(C) No. 23087 of 2012. The High
Court directed the Principal Secretary, PWD to consider and
pass orders on his representation. It is apt to note here that
the respondent had filed series of writ petitions, namely,
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W.P.(C) No. 26075 of 2012 and W.P.(C) No. 5690 of 2013
and the High Court vide order dated 08.04.2013 in W.P.(C)
No. 5690 of 2013, directed the Secretary, PWD to pass
appropriate orders in accordance with law. Eventually, as
has been stated earlier, the contract was terminated.
5. The said order of termination was assailed in WP(C)
No. 22541 of 2013. The learned Single Judge noted the
facts and took note of prayer no. (c) which was for issue of a
writ of mandamus or any other appropriate writ, order or
direction directing the respondents to take steps for
measurement of the work already completed by him and
making corresponding entries in the measurement book.
The said prayer was acceded to by the counsel for the State
of Kerala and accordingly the learned Single Judge directed
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measurement of the work to be completed effecting
necessary entries in the measurement book before
finalization of the tender proceedings, if any, in respect of
balance work. The learned Single Judge had also directed
that the measurements should take place after notice to the
contractor.
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6. The aforesaid order was assailed in the writ appeal.
When the appeal was listed for admission, the Appellate
Bench, on 17.12.2013, passed the following order:-
“We heard the learned counsel for the appellant
at length. Ext. P15 order shows that more than
50% of the work remains to be completed. The
learned counsel for the appellant referred to
paragraph 10 of the counter affidavit filed by the
first respondent dated 15.3.2013 in W.P.(C) No.
5690 of 2013 (another writ petition filed by the
appellant) wherein it is stated that “over all 70%
of total works completed so far”. The learned
counsel for the appellant submitted that nearly
90% of the work was over and the work could not
be completed within the extended period since
the Department did not fulfil certain mandatory
requirements in order to complete the work and
since a stop memo was issued even before the
expiration of the extended period.
2. Learned counsel for the appellant submitted
that the appellant is prepared to take out a
commission to substantiate the contention that
90% of the work is over. Learned Government
pleader sought for a short time to get
instructions. Since the matter is urgent and
since the courts are going to be closed on
20.12.2013, we are inclined to grant only a day’s
time to get instructions on the prayer made by
the appellant that a commissioner may be
appointed.”
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7. On the adjourned date, the counsel for the State
submitted that the respondent had no objection for
appointment of Commissioner. On the aforesaid basis, the
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Division Bench appointed two Advocates as joint
commissioners to inspect the site and to submit the report
in respect of the disputed questions mentioned in the order
dated 17.12.2013. Thereafter, the Court passed the
following order:-
“The Commissioners would be free to seek the
help of a competent Engineer for the purpose of
enabling them to prepare a report which would
throw light on the disputed question involved in
the case. The appellant as well as respondents
would provide all assistance to the
Commissioners for execution of their work. The
Commissioners would be entitled to call for any
record from the appellant as well as respondents
3 and 4 for the purpose of executing the work
entrusted to them.”
8. The Commission appointed by the Appellate Bench
took assistance of one Retired Assistant Executive Engineer,
PWD who submitted a report to the commissioners, which
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was annexed to the Commission’s report. We need not refer
to the report which has been reproduced by the impugned
order. However, the Engineer who assisted the
Commission, in his report under the heading ‘Details of
work done’, has stated thus:-
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“Anyhow the contractor has executed a minimum
amount of work so far up to the commission,
inspection date of 3.1.2014 of Rs.2,27,90,383/-
which is 72.24% of the revised estimate and
97.09% of the original work (Estimate PAC).
There are some minor damages in the completed
portion of BT surface and white topped portion
(concrete road) and the general condition of the
whole work executed by the contractor is
satisfactory. A detailed item wise statement is
prepared and appended herewith for perusal as
Annexure A.”
9. The Appellate Bench on the basis of the said report
came to hold that the order of termination was founded on
erroneous facts inasmuch as the competent authority had
opined that more than 50% of the work remained to be
done. The Division Bench opining that as there was a
factual defect, which was evident from the commission’s
report, the order of termination of contract was liable to be
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quashed and accordingly axed the same. After quashing the
same, the High Court directed the Superintending Engineer,
PWD, (Roads and Bridges) to consider and dispose of the
matter afresh after affording an opportunity to the
contractor of being heard. It also directed that the
Commission’s report and the Engineer’s report and the
accounts shall be produced by the contractor before the
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competent authority who shall take the same into account
before taking final decision in the matter. After so directing,
the High Court eventually ruled that:
“Since Exhibit P15 order is passed on incorrect
data and since that data was found to be
incorrect by appointing Joint Commissioners, we
are of the view that the Government should bear
the expenses of the Commissioners and expenses
of the Engineer in submitting the reports. Before
conducting a final hearing, a sum of Rs.40,000/-
shall be paid by the first respondent to the
appellant/writ petitioner. Taking into account
the work done by the Engineer, we think that an
additional remuneration of Rs.5,000/- should be
paid to the Engineer. The appellant/writ
petitioner shall pay the said amount of
Rs.5,000/- to the Engineer within 15 days and
proof thereof shall be produced by the appellant
before this Court.”
10. We have heard Mr. Ramesh Babu M.R., learned
counsel for the appellants and Mr. K. Parmeshwar, learned
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counsel for the respondent.
11. The thrust of the matter is whether the Appellate
Bench in intra-court appeal arising from a petition under
Article 226 of the Constitution, should have carried out the
exercise that it has done and eventually quashed the order
terminating the contract by the competent authority of a
Department on the ground that it was passed on erroneous
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facts, for the respondent contractor, as per the
Commission’s report, had done higher percentage of work.
We would not like to comment anything on the order passed
by the learned Single Judge as that was not challenged by
the State before the Appellate Court in appeal. The learned
Single Judge had directed measurement to be carried out
prior to floating of tender for the balance work. That
direction, as is evident, has been accepted by the State.
12. As the factual narration would reveal, the respondent
has been invoking the jurisdiction of the High Court under
Article 226 of the Constitution on various occasions
challenging every action which pertain to extension of time,
denial of revised estimate by the State Government and
many other facets of that nature and the High Court, we
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must say, has been generously passing orders for
consideration by the appropriate authority, for grant of
opportunity of being heard to the contractor and to consider
his representation in accordance with law. This kind of
orders in a contractual matter, in our considered view, is
ill-conceived. They not only convert the controversy to a
disturbing labyrinth, but encourage frivolous litigation. The
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competent authority might have mentioned that more than
50% work remained to be done but that should not have
prompted the Appellate Bench hearing the intra-court
appeal to appoint a Commission of two Advocates and
granting them liberty to take assistance of a competent
Engineer. As the report would show, the Commission of two
Advocates have taken assistance of a retired Assistant
Executive Engineer and submitted the report. Though,
learned counsel for the State had not objected to the same,
yet we really fail to fathom how a writ jurisdiction can be
extended to cause a roving enquiry through a Commission
and rely on the facts collected without granting opportunity
to the State to file objections to the same and in the
ultimate eventuate, cancel the order of termination of
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contract. What precisely was the quantum of work done
and whether there had been a breach by the owner or the
contractor, are required to be gone into by the appropriate
legal forum.
13. A writ court should ordinarily not entertain a writ
petition, if there is a breach of contract involving disputed
questions of fact. The present case clearly indicates that
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the factual disputes are involved. In State of Bihar v.
1
Jain Plastics and Chemicals Ltd. , a two-Judge Bench
reiterating the exercise of power under Article 226 of the
Constitution in respect of enforcement of contractual
obligations has stated:-
“It is to be reiterated that writ petition under
Article 226 is not the proper proceedings 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.”
In the said case, it has been further observed:-
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“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 a 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
1
(2002) 1 SCC 216
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investigated and determined on the basis of
evidence which may be led by the parties in a
properly instituted civil suit rather than by a
court exercising prerogative of issuing writs.”
14. In National Highways Authority of India v. Ganga
2
Enterprises , the respondent therein had filed a writ
petition before the High Court for refund of the amount.
The High Court posed two questions, namely, (a) whether
the forfeiture of security deposit is without authority of law
and without any binding contract between the parties and
also contrary to Section 5 of the Contract Act; and (b)
whether the writ petition is maintainable in a claim arising
out of breach of contract. While dealing with the said issue,
this Court opined that:-
“It is settled law that disputes relating to
contracts cannot be agitated under Article 226 of
the Constitution of India. It has been so held in
3
the cases of Kerala SEB v. Kurien E. Kalathil ,
4
State of U.P. v. Bridge & Roof Co. (India) Ltd. and
5
Bareilly Development Authority v. Ajai Pal Singh .
This is settled law. The dispute in this case was
regarding the terms of offer. They were thus
contractual disputes in respect of which a writ
court was not the proper forum. Mr Dave,
however, relied upon the cases of Verigamto
6
Naveen v. Govt. of A.P. and Harminder Singh
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2
(2003) 7 SCC 410
3
(2000) 6 SCC 293
4
(1996) 6 SCC 22
5
(1989) 2 SCC 116
6
(2001) 8 SCC 344
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7
Arora v. Union of India . These, however, are
cases where the writ court was enforcing a
statutory right or duty. These cases do not lay
down that a writ court can interfere in a matter of
contract only. Thus on the ground of
maintainability the petition should have been
dismissed”.
15. Having referred to the aforesaid decisions, it is
obligatory on our part to refer to two other authorities of
this Court where it has been opined that under what
circumstances a disputed question of fact can be gone into.
8
In Gunwant Kaur v. Municipal Committee, Bhatinda , it
has been held thus:-
“14. The High Court observed that they will not
determine disputed question of fact in a writ
petition. But what facts were in dispute and what
were admitted could only be determined after an
affidavit-in-reply was filed by the State. The High
Court, however, proceeded to dismiss the petition
in limine. The High Court is not deprived of its
jurisdiction to entertain a petition under Article
226 merely because in considering the
petitioner’s right to relief questions of fact may
fall to be determined. In a petition under Article
226 the High Court has jurisdiction to try issues
both of fact and law. Exercise of the jurisdiction
is, it is true, discretionary, but the discretion
must be exercised on sound judicial principles.
When the petition raises questions of fact of a
complex nature, which may for their
determination require oral evidence to be taken,
and on that account the High Court is of the view
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7
(1986) 3 SCC 247
8
(1969) 3 SCC 769
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that the dispute may not appropriately be tried in
a writ petition, the High Court may decline to try
a petition. Rejection of a petition in limine will
normally be justified, where the High Court is of
the view that the petition is frivolous or because
of the nature of the claim made dispute sought to
be agitated, or that the petition against the party
against whom relief is claimed is not
maintainable or that the dispute raised thereby is
such that it would be inappropriate to try it in
the writ jurisdiction, or for analogous reasons.
15. From the averments made in the petition filed
by the appellants it is clear that in proof of a
large number of allegations the appellants relied
upon documentary evidence and the only matter
in respect of which conflict of facts may possibly
arise related to the due publication of the
notification under Section 4 by the Collector.
16. In the present case, in our judgment, the
High Court was not justified in dismissing the
petition on the ground that it will not determine
disputed question of fact. The High Court has
jurisdiction to determine questions of fact, even if
they are in dispute and the present, in our
judgment, is a case in which in the interests of
both the parties the High Court should have
entertained the petition and called for an
affidavit-in-reply from the respondents, and
should have proceeded to try the petition instead
of relegating the appellants to a separate suit.”
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[Emphasis added]
16. In ABL International Ltd. v. Export Credit
9
Guarantee Corpn. of India Ltd. , a two-Judge Bench after
9
(2004) 3 SCC 553
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1
referring to various judgments as well as the
pronouncement in Gunwant Kaur (supra) and Century
Spg. And Mfg. Co. Ltd. v. Ulhasnagar Municipal
10
Council , has held thus:-
“19. Therefore, it is clear from the above
enunciation of law that merely because one of the
parties to the litigation raises a dispute in regard
to the facts of the case, the court entertaining
such petition under Article 226 of the
Constitution is not always bound to relegate the
parties to a suit. In the above case of Gunwant
Kaur this Court even went to the extent of
holding that in a writ petition, if the facts require,
even oral evidence can be taken. This clearly
shows that in an appropriate case, the writ court
has the jurisdiction to entertain a writ petition
involving disputed questions of fact and there is
no absolute bar for entertaining a writ petition
even if the same arises out of a contractual
obligation and/or involves some disputed
questions of fact.
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xxxxx xxxxx xxxxx
27 . From the above discussion of ours, the
following legal principles emerge as to the
maintainability of a writ petition:
( a ) In an appropriate case, a writ petition as
against a State or an instrumentality of a State
arising out of a contractual obligation is
maintainable.
( b ) Merely because some disputed questions of
fact arise for consideration, same cannot be a
10
(1970) 1 SCC 582
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ground to refuse to entertain a writ petition in all
cases as a matter of rule.
( c ) A writ petition involving a consequential
relief of monetary claim is also maintainable.
While laying down the principle, the Court sounded a
word of caution as under:-
“However, while entertaining an objection as to
the maintainability of a writ petition under Article
226 of the Constitution of India, the court should
bear in mind the fact that the power to issue
prerogative writs under Article 226 of the
Constitution is plenary in nature and is not
limited by any other provisions of the
Constitution. The High Court having regard to
the facts of the case, has a discretion to entertain
or not to entertain a writ petition. The Court has
imposed upon itself certain restrictions in the
exercise of this power. (See Whirlpool Corpn. v.
11
Registrar of Trade Marks .) And this plenary right
of the High Court to issue a prerogative writ will
not normally be exercised by the Court to the
exclusion of other available remedies unless such
action of the State or its instrumentality is
arbitrary and unreasonable so as to violate the
constitutional mandate of Article 14 or for other
valid and legitimate reasons, for which the Court
thinks it necessary to exercise the said
jurisdiction”.
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17. It is appropriate to state here that in the said case, the
Court granted the relief as the facts were absolutely clear
from the documentary evidence brought which pertain to
11
(1998) 8 SCC 1
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interpretation of certain clauses of contract of insurance. In
that context, the Court opined:-
“.... The terms of the insurance contract which
were agreed between the parties were after the
terms of the contract between the exporter and
the importer were executed which included the
addendum, therefore, without hesitation we must
proceed on the basis that the first respondent
issued the insurance policy knowing very well
that there was more than one mode of payment of
consideration and it had insured failure of all the
modes of payment of consideration. From the
correspondence as well as from the terms of the
policy, it is noticed that existence of only two
conditions has been made as a condition
precedent for making the first respondent
Corporation liable to pay for the insured risk,
that is: ( i ) there should be a default on the part of
the Kazak Corporation to pay for the goods
received; and ( ii ) there should be a failure on the
part of the Kazakhstan Government to fulfil their
guarantee”.
And it eventually held:-
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“..... We have come to the conclusion that the
amended clause 6 of the agreement between the
exporter and the importer on the face of it does
not give room for a second or another
construction than the one already accepted by
us. We have also noted that reliance placed on
sub-clause ( d ) of the proviso to the insurance
contract by the Appellate Bench is also misplaced
which is clear from the language of the said
clause itself. Therefore, in our opinion, it does not
require any external aid, much less any oral
evidence to interpret the above clause. Merely
because the first respondent wants to dispute
this fact, in our opinion, it does not become a
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disputed fact. If such objection as to disputed
questions or interpretations is raised in a writ
petition, in our opinion, the courts can very well
go into the same and decide that objection if facts
permit the same as in this case”.
18. In this regard, a reference to Noble Resources Ltd. v.
12
State of Orissa and Another would be seemly. The
two-Judge Bench referred to the ABL International
(supra), Dwarkadas Marfatia & Sons v. Board of
13
Trustees, Port of Bombay , Mahabir Auto Stores v.
14
Indian Oil Corp. and Jamshed Hormusji Wadia v.
15
Board of Trustees, Port of Mumbai and opined thus:-
“Although the scope of judicial review or the
development of law in this field has been noticed
hereinbefore particularly in the light of the
decision of this Court in ABL International Ltd.
each case, however, must be decided on its own
facts. Public interest as noticed hereinbefore,
may be one of the factors to exercise the power of
judicial review. In a case where a public law
element is involved, judicial review may be
16
permissible. (See Binny Ltd. v. V. Sadasivan and
17
G.B. Mahajan v. Jalgaon Municipal Council .)”
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19. Thereafter, the court proceeded to analyse the facts
and came to hold that certain serious disputed questions of
12
(2006) 10 SCC 236
13
(1989) 3 SCC 293
14
(1990) 3 SCC 752
15
(2004) 3 SCC 214
16
(2005) 6 SCC 657
17
(1991) 3 SCC 91
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facts have arisen for determination and such disputes
ordinarily could not have been entertained by the High
Court in exercise of its power of judicial review and
ultimately the appeal was dismissed.
20. We have referred to the aforesaid authorities to
highlight under what circumstances in respect of
contractual claim or challenge to violation of contract can be
entertained by a writ court. It depends upon facts of each
case. The issue that had arisen in ABL International
(supra) was that an instrumentality of a State was placing a
different construction on the clauses of the contract of
insurance and the insured was interpreting the contract
differently. The Court thought it apt merely because
something is disputed by the insurer, it should not enter
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into the realm of disputed questions of fact. In fact, there
was no disputed question of fact, but it required
interpretation of the terms of the contract of insurance.
Similarly, if the materials that come on record from which it
is clearly evincible, the writ court may exercise the power of
judicial review but, a pregnant one, in the case at hand, the
High Court has appointed a Commission to collect the
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evidence, accepted the same without calling for objections
from the respondent and quashed the order of termination
of contract. The procedure adopted by the High Court, if we
permit ourselves to say so, is quite unknown to exercise of
powers under Article 226 in a contractual matter. We can
well appreciate a Committee being appointed in a Public
Interest Litigation to assist the Court or to find out certain
facts. Such an exercise is meant for public good and in
public interest. For example, when an issue arises whether
in a particular State there are toilets for school children and
there is an assertion by the State that there are good toilets,
definitely the Court can appoint a Committee to verify the
same. It is because the lis is not adversarial in nature. The
same principle cannot be taken recourse to in respect of a
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contractual controversy. It is also surprising that the High
Court has been entertaining series of writ petitions at the
instance of the respondent, which is nothing but abuse of
the process of extraordinary jurisdiction of the High Court.
The Appellate Bench should have applied more restraint
and proceeded in accordance with law instead of making a
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roving enquiry. Such a step is impermissible and by no
stretch of imagination subserves any public interest.
21. Consequently, the appeal is allowed and the judgment
and order passed by the Appellate Bench is set aside.
However, in the facts and circumstances of the case, we
refrain from imposing costs.
.............................J.
[Dipak Misra]
..........................., J.
[Prafulla C. Pant]
New Delhi
August 14, 2015
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