M/S Advik Laboratories Ltd vs State Of Punjab And Another on 18 November, 2009

             IN THE HIGH COURT OF PUNJAB AND HARYANA
                           AT CHANDIGARH

                    Civil Writ Petition No.5036 of 2009
                   Date of decision: 18th November, 2009

M/s Advik Laboratories Ltd.
                                                                ... Petitioner
                                     Versus
State of Punjab and another
                                                            ... Respondents


CORAM:        HON'BLE MR. JUSTICE KANWALJIT SINGH AHLUWALIA

Present:      Mr. R.K. Chopra, Senior Advocate with
              Ms. Maninder, Advocate for the petitioner.
              Mr. Anil Kumar Sharma, Additional Advocate General, Punjab
              for the respondents.
              Mr. G.S. Sandhawalia, Advocate for respondent No.2.


KANWALJIT SINGH AHLUWALIA, J. (ORAL)

Present writ petition has been filed seeking quashing of

impugned order (Annexure P-14) dated 19th March, 2009. A perusal of

Annexure P-14 reveals that Punjab Health Systems Corporation had

communicated to the Senior Manager, Indian Overseas Bank that bank

guarantee furnished by the petitioner be revoked.

To appreciate the controversy, it will be necessary to

recapitulate the facts. Petitioner company manufacture drugs. Punjab

Health Systems Corporation, an instrumentality of the State, floated

tenders. Petitioner applied and was declared as a successful bidder and

was awarded the contract. As per the contract, to secure the interest of the

Corporation, petitioner had submitted bank guarantee. According to

counsel for the respondent Corporation, petitioner failed to perform his part

of the contract, therefore, they had proceeded to encash the bank

guarantee.

Civil Writ Petition No. 5036 of 2009 2

Mr.R.K. Chopra, assisted by Ms.Maninder, appearing for the

petitioner, controverts this assertion and states that the breach of the

contract has been on the part of the Corporation. Mr. Chopra states that

due to the recession in market and delayed payment on the part of the

respondents, petitioner was not able to adhere to the schedule of supply of

drugs.

Whether the act of the respondent Corporation to encash the

bank guarantee can be made subject matter of the writ jurisdiction or not ?

Who is the defaulter ? Who has made breach of contract ? and as to why

the contract could not be adhered to ?, are all disputed questions of fact,

which cannot be gone into in the writ jurisdiction. In the present case,

performance of the contract is sought by invoking the writ jurisdiction.

Counsel for the respondents relies upon ‘National Highway

Authority of India v. M/s Ganga Enterprises’ 2003 (7) SCC 410. Para 7

of the judgment read as under:

“7. The Respondent then filed a Writ Petition in the
High Court for refund of the amount. On the pleadings before
it, the High Court raised two questions viz. (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 a breach
of contract. Question (b) should have been first answered as it
would go to the root of the matter. The High Court instead
considered question (a) and then chosen not to answer
question (b). In our view, the answer to question (b) is clear. 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 the case of Kerala State Electricity Board v.
Kurien E.Kalathil reported in 2000(4) S.C.T. 242 : (2000) 6
SCC 293, State of U.P. v. Bridge & Roof Co. (India) Ltd.
reported in (1996) 6 SCC 22 and B.D.A. v. Ajai Pal Singh
reported in (1989) 2 SCC 116. This is settled law. The
dispute in this case was regarding the terms of offer. They
Civil Writ Petition No. 5036 of 2009 3

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 Naveen v. Government of A.P.
reported in (2001) 8 SCC 344 and Harminder Singh Arora
v. Union of India reported in (1986) 3 SCC 247. 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.”

Therefore, this Court cannot come to the rescue of the

petitioner. Hence, the present writ petition is dismissed. However,

petitioner will be at liberty to take recourse to the alternative remedy

available to him under provisions of law.

[KANWALJIT SINGH AHLUWALIA]
JUDGE
November 18, 2009
rps