Holding

A writ petition cannot be entertained for a private contractual dispute where alternative civil remedies exist; the High Court erred in entertaining the petition and its order is set aside.

Summary

The Pimpri Chinchwad Municipal Corporation (PCMC) entered into a contract with M/s Gayatri Construction for Phase‑III of the Telco‑Bhosari road. The contractor failed to complete the work within the stipulated 12‑month period, leading PCMC to invoke a termination clause and invite fresh tenders for the same stretch of road. The contractors filed a writ petition under Article 226 of the Constitution challenging the fresh tender and the termination, which the Bombay High Court entertained and ordered a status‑quo. On appeal, the Supreme Court held that disputes arising out of a private (non‑statutory) contract are not maintainable under Article 226 when an alternative civil remedy exists, and that the contract was not a statutory contract. Consequently, the High Court’s order was set aside and the writ petition dismissed. The appeal was allowed.

Issues considered

Whether a writ petition under Article 226 is maintainable in a dispute arising out of a private construction contract.
Whether the contract between PCMC and the contractor is a statutory contract rendering it amenable to writ jurisdiction.
Whether the existence of an alternative civil remedy bars the maintainability of the writ petition.

Legislation cited

Constitution of Indias. Article 226
Indian Contract Act, 1872

Subjects

writ petitioncontract lawmaintainabilityArticle 226statutory contractalternative remedypublic procurementmunicipal corporationconstruction contractnatural justice

Judgment

[2008] 11 S.C.R. 980
""'
A PIMPRI CHINCHWAD MUNICIPAL CORPORATION AND ORS.
v.
M/S GAYATRI CONSTRUCTION COMPANY AND ANR.
(Civil Appeal No. 4912 of 2008)
AUGUST 6, 2008
B ....
[DR. ARIJIT PASAYAT AND DR. MUKUNDAKAM
SHARMA, JJ.]

Constitution of India, 1950; Article 226/lndian Contract
t Act, 1872:
Writ petition in contractual matter - Maintainability of - ~

Held: Not maintainable.
Appellant and the respondents entered into an
agreement for construction of road. There arose some.
D
disputes and the contract was terminated. Fresh tenders
were invited for construction and widening of road, which ""
was the subject matter of the contract. Respondents cha I-
lenged the same by filing a writ petition, which was al-
lowed by the High Court. Hence the present appeal.
E
The question which arose for determination in the
present appeal was about the maintainability of the writ
petition in respect of contractual disputes between ap-
pellant-Corporation and the respondents-Contractors.
F Appellant contended that the High Court lost sight ~
of the objections raised as regards the maintainability of
the writ petition; that the writ petition was not maintain-
able in respect of contractual matters; that the respon-
dents were seeking relief of enforcement of their contrac-
G tual rights; and that several relevant and material facts
have been suppressed.
Respondents-Contractor submitted that the Corpo-
ration itself was guilty.of not providing the requisite infra-
H 980
PIMPRI CHINCHWAD MUNICIPAL CORPN. & ORS. v. 981
M/S GAYATRI CONSTRUCTION CO. & ANR.

structure for carrying out the contractual obligations. The A
difficulties have been highlighted in various representa-
tions to the Corporation. But without any plausible rea-
son and without following the principles of natural jus-
tice the fresh advertisement was issued by the Corpora-
~
ti on. B
Allowing the appeal, the Court
HELD: The High Court ought not to have entertained
the writ petition. It appears that by order dated 17 .1.2007
interim stay of the impugned order was granted and was c
continued by order dated 12.2.2007. It is pointed out by
the counsel for the appellants that since the order of the
High Court was stayed and there was urgency in the mat-
ter fresh tenders were called for. Three persons submit-
ted the bids and the work has already been allotted and a
D
considerable portion of the work has already been com-
..,,
pleted. In view of aforesaid, the impugned order of the
High Court is set aside and the writ petition is dismissed.
It is however open to the respondents-writ petitioners to
seek such remedy, if so advised, as is available in law.
(Para - 13) [991-D-F] E

National Highways Authority of India v. Ganga Enter-
·prises (2003) 7 SCC 410; Kera/a State Electricity Board and
Anr. v. Kurien E. Kalathil and Ors. (2000) 6 SCC 293; State of
Gujarat and Ors. v. Meghji Pethraj Shah Charitable Trust and F
.. Ors. (1994) 3 SCC 552; State of UP and Ors. v. Bridge &
Roof Company (India) Ltd. (1996) 6 SCC 22 and India Ther-
ma/ Power Ltd. v. State of M.P and Ors. (2000) 3 sec 379 -
relied on.
Case Law Reference G
·'
(2003) 1 sec 410 . Relied on Para - 8
ll
'
,,.. (2000) s sec 293 Relied on Para - 9
(1994) 3 sec 552 Relied on Para - 10
H
982· SUPREME COURT REPORTS [2008] 11 S.C.R.
'<('

A (1996) s sec 22 Relied on Para -11
(2000) 3 sec 379 Relied on Para - 12
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 4912
of 2008
B From the Judgment and Order dated 14.12.2006 of the
High Court of Judicature at Bombay in Writ Petition No. 5681
of 2006
Makarand D. Adkar and Vishwajit Singh for the Appellants.
c Sh~khar Naphade, E.C. Agrawala, Mahesh Agarwal, Rishi
Ag~~wala, Gaurav Goel and Amit Kumar Sharma for the Re-
spondehts.
The Judgment of the Court was delivered by
D Dr. ARIJIT PASAYAT. 1. Leave granted.
2. Challenge in this appeal is to the judgment of a Divisior.
Bench of the Bombay High Court allowing the Writ Petition filed ""'
by the respondents.

E 3. Background facts in a nutshell are as follows:
Writ Petition was filed by respondents 1 and 2 taking the
stand that respondent No.1 was awarded a contract for the work
of improvement and widening of part of the Thermax:-Telco-
Bhosari road which was divided in th-ree phases and contract
F for Phase-Ill (Approx. 3.7 Kms.) was given to the them, whereas
~
the tender of Phase-II with its cost at Rs.8,61,63,048/- was
awarded to another party (Approx. 3.3 Kms.) Though the ten-
der amount was Rs.9 crores-with a discount at 9.01 %, the con-
tract price was fixed at Rs.8, 18,91,000/- and the letter by the
G Corporation to the respondents was given on 7/4/2005 and the
k
work was to be completed within 12 months from that date. There
is n9 dispute that the work was not completed and the
corporation released an advertisement published in some of
the local newspapers on 30/6/2006 inviting tenders for the im-
'i....

H provement and widening of four roads, including the road which
PIMPRI CHINCHWAD MUNICIPAL CORPN. & ORS. v. 983
,. MIS GAYATRI CONSTRUCTION CO. &ANR. [DR. ARIJIT PASAYAT]

was the subject matter of the contract awarded to the respon- A
dents i.e. Item No. 3-A - Telco road. The approximate costs of
this road in the advertisement has been shown to be Rs.30
crores as against the original tender cost of Rs.17.6 crores.
After the advertisement was released, the respondents were
issued a letter dated 19/7/2006 informing the Corporation's B
~ decision to take action under clause 3(a) of the contract and
the respondents were called upon to remain present for final
measurement on 271612006. The respondents submitted a rep-
resentation on 25/7/2006 and by its letter dated 1/8/2006 the
corporation reiterated its action as per the letter dated 19/7/ c
' 2006. The respondents approached the High Court on 22181
2006 after they had submitted another representation on 4181
20006 to the Corporation and the Corporation confirmed the
decision to stop work. The respondents filed writ petition chal-
le_nging action of appellants in releasing the advertisement and
D
inviting fresh tenders on 30/6/2006 for the very same work which
..., is part of the contract awarded to the respondents i.e. Item No.3-
A Improvement and Widening of remaining stretch of Telco Road
and ~onsequently the attempt to terminate the contract post facto
. by invoking clause 3(a) of the contract.
E
The present appellants filed an affidavit in reply and raised
a preliminary objection as to the maintainability of the writ peti-
tion. It was contended that the writ petitioners had an alternative
remedy for enforcement of the contract. In matters flowing from
the contract, a petition under Article 226 of the Constitution of F
India, 1950 (in short the 'Constitution') cannot be maintained.
>-
Further, disputed questions are involved. On merits it was also
contended that it was the contractor firm which was responsible
for not maintaining the contractual terms and in spite of the con-
tractual period having been over, the work could not be com-
G
l pleted and the contractors went on insisting that the entire stretch
~
of the road be handed over to them so as to start and complete
the work. In short the contractors failed to complete the work in
• 12 months' time and therefore the contract was terminated.
J

The High Court found that though Clause 58 of the agree- H
r
984 SUPREME COURT REPORTS [2008] 11 S.C.R.

-..;
.__
A ment provided for inhouse remedy of representation for settle-
~
ment of disputes that cannot stand in the way of the writ petition
being entertained. It was submitted by writ petitioners that the
cost of completing the work would be much higher than what l
!>--
would have been payable to the writ petitioners. The High Court
~
8 referred to the Minutes of the Corporation and held that the writ
)r
petitioners were justified in challenging the Corporation's ac-
tion to invite fresh tenders for the work allotted to it. It also re- ,.
\.-

ferred to the undertaking given by the writ petitioners to the ef- .-
feet that they were ready and willing to execute the work but
c were unable to do so for several reasons. The High Court, there-
..,_
fore, directed the Corporation not to complete the work and to
maintain status quo in respect of Phase-Ill of Telco Road as
well as the tenders received for the said work in response to
the advertisement which was impugned before the High Court.
D 4. In support of the appeal; learned counsel for the Corpo-
ration and its functionaries submitted that the High Court lost
~
sight of the objections raised as regards to the maintainability
of the writ petition. It was submitted that there was cancellation
oftender and fresh advertisement was issued. The agreement
E provided inhouse mechanism in relation to dispute arising out
of the contract. The High Court did not consider this aspect.
The High Court also did not take note of the difference between
the statutory contracts and non-statutory contracts. Before the
High Court the writ petition was questioned on three grounds;
F (i) disputed questions relates to facts were involved; (ii) to en-
force the terms of contractual rights remedy under the Civil Law -{
is available, and in any event, the writ petition was not maintain-
able in respect of contractual matters. It was pointed out that
the writ petitioners were seeking relief of enforcement of their
contractual rights, and that several relevant and material facts
G
have been suppressed. In essence, it was submitted that the ,.
1
above aspects have not been considered by the High Court.
~
5. In response; learned counsel for the respondents-writ
petitioners submitted that the Corporation itself was guilty of "
H not providing the requisite infrastructure for carrying out the con-
_. PIMPRI CHINCHWAD MUNICIPAL CORPN. & ORS. v. 985
.....
,.., M'S GAYATRI CONSTRUCTION CO. &ANR. [DR. ARIJIT PASAYAT.]

tractual obligations. The difficulties have been highlighted in A
various representations to the Corporation. But without any plau-
·sible reason and without following the principles of natural jus-
tice the fresh advertisement was issued. It is also pointed out
that subsequently there appears to be the settlement of the work
at a huge cost.
., B
6. So far as existence of the alternative remedy is con-
cerned Clause 58 of the agreement is relevant. The same reads
as under:

"Clause 58-All disputes & differences of any kind whatever c
arising out of or in connection with the contractor the earring
out of the work (whether during the progrt?SS of the work
or after their complete & whether before or after the
determination, abandonment or breach of the contract)
shall be referred to & settled by the City Engineer. But, if o-
the contractor be dissatisfied with the decision of the City
~
. '1 Engineer or as to withholding by the City Engineer of any
certificate to which the contractor may within 60 days after
receiving notice of such decision give a written notice to
the other party requiring that may claim to entitled then &
in any such case the contractor such matter in dispute be E.
referred to in open before a· Committee as mentioned
below. Such written notice shall specify the manner which
are in disputes & such disputes or difference of whjch
such r)otice has been given & no other shall be & is hereby
referred committee consisting of the Commissioner, F
).
Pimpri Chinchwad Municipal Corporation, the city engineer
and project management consultant, the decision taken
by the parties will be final and binding on both the parties.
Such reference except as to the withholding of any
certificate to which the contractor to be entitled shall not G
be opened or entered upon until after the completion or • ._J

. ·,.
..
alleged completion of the works or until after 1he practical
t
cessation of the City Engineer. Provided always that the
Corporation shall not withhold the payment of an Interim
Certificate not the Contractor in any way delay the carrying H
986 SUPREME COURT REPORTS [2008] 11 S.C.R.

A out of the works by reason of any such matters, question
or dispute being referred to the Committee but shall
proceed with the work with all the diligence & shall, until
the decision of the Committee abide by the decision of
the City Engineer & no award of the Committee shall relive
B the contractor of his obligations to adhere strictly to the
City Engineer's instructions with regard to the actual
carrying out of the works. The Owner & the Contractor
hereby also agree that the said reference to the Committee
under this clause shall be a condition precedent to any
c right of action under the Contract."
7. In matters relating to maintainability of writ petitions in
contractual matters there are catena of decisions dealing with
the issue.
8. In National Highways Authority of India v. Ganga En-
0
terprises (2003 (7) sec 410), it was inter alia held as follows:
"6. 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
E 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
F answered as it would go to the root of the matter. The High
Court instead considered Question (a) and then chose
not to ansyver 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 cases of
G
Kera/a SEB v. Kurien E. Ka/athil (2000 (6) SCC 293),
State of UP v. Bridge & Roof Co. (India) Ltd. (1996 (6)
SCC 22) and Barei/ly Development Authority v. Ajai Pal
Singh 1989 (2) SCC 116. This is settled law. The dispute
in this case was regarding the terms of offer. They were
H
PIMPRI CHINCHWAD MUNICIPAL CORPN. & ORS. v. 987
MIS GAYATRI CONSTRUCTION CO. &ANR. [DR. ARIJIT PASAYAT.]
~
thus contractual disputes in respect of which a writ court A
was not the proper forum. Mr Dave, however, relied upon
the cases of Verigamto Naveen v. Govt. of A.P (2001 (8
SCC 344)) and Harminder Singh Arora v. Union of India
(1986 (3) SCC 247). These, however, are cases where
the writ court was enforcing a statutory right or duty. These B
-\
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."
9. In Kera/a State Electricity Board and Anr v. Kurien E.
" Kalathil and Ors. (2000 (6) SCC 293), this Court dealt with the c
question of maintainability of petition ·under Article 226 of the
Constitution and the desirability of exhaustion of remedies and
availability of alternative remedies, as also difference between
statutory contracts and non-statutory contracts. In paras 10 and
11 of the judgment it was noted as follows: D
"10. We find that there is a merit in the first contention of
Mr Raval. 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 E
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 F
). 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 G
... contract on the contracting parties come within the purview
of the Contract Act, that would not make the contract
-1
~
statutory. Clearly, the High Court fell into an error in coming
~ to the conclusion that the contract in question was statutory
in nature. H
988 SUPREME COURT REPORTS [2008] 11 S.C.R

....
A 11. Astatute 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
B fact that one of the parties to the agreement is a statutory
or public body will not by itself affect the principles to be
, applied. The disputes about the meaning of a covenant in
a contract or its ~nforceability ·have to be determined
according to the usual principles of the Contract Act. Every I
Jt
c 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
D
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
E 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 relegated to other remedies."
.F
10. Reference can also be made·to State of Gujarat and
.. \. Ors. v. Meghji Pethraj Shah Charitable Trust and Ors. (1994
(3) SCC 552). In para 22 it was observed as follows:
..
··~?2 w,_~ are unable to s~e any substance in the argumept
that the termination .of arrangement without observing the
principle olnatural justice (audi alteram partem) is void.
The termination is not a quasi-judicial act by any stretch of •
imagination; hence it was -not necessary to observe the
principles of natural justice. It is not also an executive or
H administrative act to attract the duty to act fairly. It was -
..
' ~ ... -
PIMPRI CHINCHWAD MUNICIPAL CORPN. & ORS. v. 989
MIS GAYATRI CONSTRUCTION CO. & ANR. [DR ARIJIT PASAYAT.]

as has been repeatedly urged by Shri Ramaswamy - a A
matter governed by a contract/agreement between the
parties. If the matter is governed by a contract, the 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. Be that as B
it may, in view of our opinion on the main question, it is not
necessary to pursue this reasoning further."
11. Again in State of UP and Ors. v. Bridge & Roof Com- ,.
pany (India) Ltd. (1996 (6) SCC 22), this Court dealt with the
issue in paras 15 and 16 in the following manner: c
"15. In our opinion, the very remedy adopted by the re-
spondent 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
D
contentions raised in the writ petition by both the parties and in
merely reiterating the effect of the order of the Deputy Comm is-
sioner made under the proviso to Section 8-0(1 ).
16. Firstly, the contract between the parties is a contract
in the realm of private law. It is not a statutory contract. It E
is governed by the provisions of the Contract Act or, maybe,
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
y not have been agitated, in a writ petition. That is a matter F
either for arbitration as provided by the contract or for the
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
G
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 a particular amount from the
writ petitioner's bill(s) was not a prayer which could be
H
990 SUPREME COURT REPORTS (2008] 11 S.C.R.
"''
A granted by the High Court under Article 226. Indeed, the
High Court has not granted the said prayer."
12.At para 11 of India Thermal Power Ltd. v. State of MP
and Ors. (2000 (3) SCC 379), it was observed as follows:

B "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 Sections 43 and 43-
A of the Electricity Supply Act and as such they are statutory
c 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
0
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 ~oard,
E 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
-{
F 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
G 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 contr~ct containing the prescribed terms and
H conditions is a must under the statute ...then that contract
~·:- •- '-'
PIMPRI CHINCHWAD MUNICIPAL CORPN. & ORS. v. 991
MIS GAYATRI CONSTRUCTION CO. & ANR. [DR. ARIJIT PASAYAT.]

becomes a statutory contract. If a contract incorporates A
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 B
between the parties. Therefore, the PPAs can be regarded
as statutory only to the extent that they contain provisions
regarding determination of tariff and other statutory
requirements of Section 43-A(2). Opening and maintaining
of an escrow account or an escrow agreement are not the c
statutory requirements and, therefore, merely because
PPAs contemplate maintaining escrow accounts that
obligation cannot be regarded as statutory".
13. Therefore, the High Court ought not to have entertained
the writ petition. Additionally, it appears that by order dated D
17.1.2007 interim stay of the impugned order was granted and
was continued by order dated 12.2.2007. It is pointed out by
learned counsel for the appellants that since the order of the
High Court was stayed and there was urgency in the matter fresh
tenders were called for. Three persons submitted the bids and E
the work has already been allotted and a considerable portion
of the work has already been completed. In view of aforesaid,
we set aside the impugned order of the High Court and direct
dismissal of the writ petition. It is however open to the respon-
dents-writ petitioners to seek such remedy, if so advised, as is F
available in law. We do not express any opinion in that regard.
14. The appeal is allowed. There shall be no order as to
costs.
S.K.S. Appeal allowed.