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CASE NO.: Appeal (civil)  5409 of 1998

PETITIONER: ABL International Ltd. & Anr.                            

RESPONDENT: Export Credit Guarantee Corportion      Of India Limited & Ors.                          

DATE OF JUDGMENT: 18/12/2003

BENCH: N.Santosh Hegde & B.P.Singh.

JUDGMENT: J U D G M E N T

SANTOSH HEGDE,J.

       One Rassik Woodworth Limited (4th respondent herein)  entered into a contract with M/s.RVO Kazpishepromsyrio, a State- owned Corporation of Kazakhstan (referred to as the Kazak  Corporation) for supply of 3,000 Metric Tons of tea. The said  agreement was entered into on or about 26th August, 1993. As per  the original agreement, the payment for such tea exported was to  be made by the Kazak Corporation by barter of goods mentioned  in the Schedule to the said agreement, within 120 days of the date  of delivery by the exporter. The agreement also provided that such  payment to be made by the Kazak Corporation is to be guaranteed  by the Government of Kazakhstan. Clause 6 of the agreement  which provided for the mode of payment by barter of goods by the  Kazak Corporation came to be amended by an addendum on the  very same day when the original agreement was executed. By the  amended agreement, it was specifically provided that if the  contract of barter of goods cannot be finalised for any reason then  the Kazak Corporation was to pay to the exporter for the goods  received by it in US Dollars within 120 days from the date of the  delivery. Such payment was to be remitted by the Kazak  Corporation to the bank account of the exporter at Delhi. This  amended agreement also provided for a guarantee being given by  the Ministry of Foreign Economic Relations of Kazakhstan for  prompt payment of such consideration. The addendum specifically  stated that the same was to form an integral part of the contract  earlier entered between the parties on the same day viz. 26.8.1993.

       After the said contract was entered into by the 4th respondent  with the Kazak Corporation, by an agreement of parties, the 4th  respondent assigned a part of the said export contract to the first   appellant herein on same terms. On a direction issued by the  Reserve Bank of India to cover the risk arising out of the export of  tea made by the appellants as per the said assigned contract, the  appellants approached the Export Credit Guarantee Corporation of  India Ltd. (the first respondent herein) on 23rd September, 1993 to  insure the risk of payment of consideration that is involved in the  said contract of export. On 30th  September, 1993, after  considerable correspondence between the parties, the first  respondent issued a comprehensive risk policy effective from 23rd   September, 1993 to 30th September, 1995 covering the risk. The  Kazakhstan Government as required in the contract through its  Ministry of Foreign Economic Relations also gave an irrevocable  guarantee that in the event the Kazak Corporation for any reason  whatsoever is unable to meet its obligation of payment due under  the contract, said Government would make the payment to the  exporter in US dollars through remittance for tea delivered. It is the

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case of the appellant that the payment of consideration by barter of  goods could not be finalised between the appellant and the Kazak  Corporation, therefore, the said Corporation agreed to pay the  consideration amount for the goods received by it in US dollars  and also paid certain sums of money in US dollars as part payment  but failed to pay the balance amount due under the contract. It is  also the case of the appellant that even the Kazakhstan  Government though admitted its liability to pay the balance of  consideration amount did not fulfil its part of the guarantee given  in the contract due to lack of funds. It is on the failure of the  Kazakhstan Government to fulfil its guarantee the appellants made  a claim on the first respondent which had covered the said risk of  compensating the loss suffered by it by the non-payment of the  consideration amount for the supply of tea made to the Kazak  Corporation. The first respondent as per its letter dated 14.12.1994,  however, repudiated the claim of the appellants stating that the  appellants had changed the terms of the contract of payment  without first consulting it, therefore, it had no obligation to  compensate the appellants for the loss suffered by it. This alleged  change of terms of the contract, according to the first respondent,  was due to the fact that the appellants had rejected the barter offer  made by the Kazak Corporation and had opted for cash payment in  US dollars which, according to the first respondent was not the  mode of payment contemplated in the contract between the  exporter and the Kazak Corporation. On further correspondence  between the appellants and the first respondent, the latter reiterated  its right to repudiate the claim of the appellants by its second letter  dated 26.5.1995 contending that the refusal of the barter offer by  the appellants without first consulting it, amounts to a change in  the mode of recovery of dues, hence, the loss suffered by such  change in the mode of recovery took away the liability of the first  respondent to pay for such loss.  

         Having failed to persuade the first respondent to adhere to  the contract of insurance between it and the appellant, the appellant  filed a writ petition before a learned Single Judge of the Calcutta  High Court, inter alia, praying for quashing of the letters of  repudiation issued by the first respondent. It also consequentially  prayed for a direction to the first respondent to make payment of  the dues to it under the contract of insurance. The learned Single  Judge after hearing the parties came to the conclusion that though  the dispute between the parties arose out of a contract, the first  respondent being a State for the purpose of Article 12, was bound  by the terms of the contract, therefore, for such non-performance, a  writ was maintainable and after considering the arguments of the  parties in regard to the liability under the contract of insurance,  allowed the writ petition and issued the writ and directions as  prayed for by the appellants in the writ petition.  

         In an appeal filed by the first respondent before the  Appellate Bench of the same High Court, the said Bench reversed  the findings of the learned Single Judge and held that the claim of  the appellant involving disputed questions of fact cannot be  adjudicated in a writ proceeding under Article 226 of the  Constitution, hence, set aside the judgment of the learned Single  Judge. In the course of its judgment the Appellate Bench also  incidentally came to the conclusion that the first respondent had  not committed any violation of the clauses or the terms of the  insurance contract. On the contrary, it observed that as per proviso  (d) to Clause (xi) of the said insurance contract, by refusing to  accept the barter of goods, the first appellant had violated the terms  of the contract disentitling it to raise any claim on the first  respondent.  

         It is against this order of the Appellate Bench of the Calcutta

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High Court that the appellants are before us.  

         In this appeal, Dr. A.M. Singhvi, learned senior counsel for  the appellants contended that the High Court though noted that the  writ petition involved disputed questions of fact has not identified  any such disputed questions of fact which disentitled the appellants  from seeking reliefs in a writ petition. He also submitted that  assuming that some disputed questions did arise for consideration  in the writ petition, that itself would not bar the High Court under  Article 226 of the Constitution from examining such questions of  fact. He further submitted that in the present case, the terms of the  contract between the exporter and the Kazak Corporation on one  hand and the contract of insurance between the appellants and the  first respondent on the other being crystal clear, there was no  question of any difficulty in interpretation of the said terms of the  contracts and all necessary facts required for the interpretation of  the said clauses of the insurance and export contracts being  admitted, the Appellate Bench of the High Court was in error in  coming to the conclusion that the writ petition involved such  disputed questions of facts which the High Court could not decide  in the writ petition. He also contended that the observations of the  High Court in the course of its judgment that the appellants had  violated the terms of the export contract or the insurance contract,  is ex facie erroneous. He submitted that this is because of the fact  that the Appellate Bench did not properly appreciate the relevant  clauses of the said contracts. He also contended that proviso (d) to  Clause (xi) of the insurance contract had no bearing whatsoever on  the facts of this case. Learned counsel then pointed out that the  basis of the repudiation as could be seen from the two letters of the  first respondent was that prior permission of the said respondent  was not taken before making a change in the terms of the export  contract. According to the learned counsel, this foundation of  repudiation of the claim is based on a presumption that there was  any such requirement either in law or in the contracts to have a  prior consultation with the first respondent while making a claim to  receive cash consideration from the exporter. It was argued that  apart from the fact that there was no change in the terms of the  contract as indicated in the letters of repudiation, the assumption of  the first respondent that it had to be consulted while making any  such demand on the Kazak Corporation is wholly baseless.  Learned counsel pointed out from the terms of the contracts, what  the appellants had insured with the first respondent was not their  goods. On the contrary, they had actually insured the non-payment  of consideration which under the terms of contract, was either by  barter or by cash. Therefore, it was not open to the first respondent  to repudiate the appellants’ claim on the ground that the mode of  barter payment was changed without consulting it and that the  contract of insurance did not cover the risk of payment in US $.   According to the learned counsel for the appellants, none of the  terms of the contracts, be it the export contract or the insurance  contract, gives any room for multiple interpretation nor requires  any evidence being led. According to said learned counsel, all that  the writ court had to decide was whether the appellant should  adhere only to receive consideration by barter of goods or it is also  entitled to demand the consideration by cash in US $ and whether  non-payment of such consideration is covered by the contract of  insurance or not which, according to learned counsel, can be  decided by examining the terms of the contracts without having to  take recourse to any external aid.  

         Ms. Indira Jaising, learned senior counsel appearing for the  first respondent submitted that on facts and circumstances of this  case, a writ petition was not maintainable nor can it be construed  as an appropriate remedy. She pointed out that the subject matter is  a dispute arising out of a contract and is not a matter falling under

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the purview of Administrative Law. According to her, the doctrine  of fairness and reasonableness applies only in the exercise of  statutory or administrative actions of a State and not in the exercise  of a contractual obligation and issues arising out of contractual  matters will have to be decided on the basis of the law of contract  and not on the basis of the administrative law. It was her argument  that at the most in matters involving statutory contracts where  action of the State involves a public duty, a writ may lie but in the  instant case, the contract was neither a statutory contract nor the  duty of the first respondent under the contract had any public law  element involved in it. According to the learned counsel, this  contract was a negotiated contract and not a standard form  contract. She also supported the finding of the Appellate Bench of  the High Court that the facts involved in the case are all disputed  facts requiring evidence to be led, therefore, the appropriate  remedy could only be a suit. Hence, the impugned judgment did  not call for any interference.          As could be seen from the arguments addressed in this  appeal and as also from the divergent views of the two courts  below one of the questions that falls for our consideration is  whether a writ petition under Article 226 of the Constitution of  India is maintainable to enforce a contractual obligation  of the  State or its instrumentality, by an aggrieved party.   In our opinion this question is no more res integra and is   settled by a large number of judicial pronouncements of this  Court.   In  K.N. Guruswamy  Vs.  The State of Mysore and  others.        [ 1955 (1) SCR 305]  this Court held:  "The next question is whether the  appellant can complain of this by way  of a writ.  In our opinion, he  could  have done so in an ordinary case.  The  appellant is interested in these  contracts and has a right  under the  laws of the State to receive the same  treatment and  be given the same  chance as anybody else.  .............................................. We would therefore in the ordinary  course have given the appellant the  writ he seeks.  But owing to the time  which this matter has taken to reach  us (a consequence for which the  appellant is in no way to blame, for he  has done all he could to have an early  hearing),  there is barely a fortnight of  the contract left to go.   .............................................. A writ would therefore be ineffective  and as it is not our practice to issue  meaningless writs we must dismiss  this appeal and leave the appellant  content with an enunciation of the  law."

       It is clear from the above observations of this Court in the  said case though a writ was not issued on the facts of that case,  this Court has held that on a given set of facts if a State acts in  an arbitrary manner even in a matter of contract, an aggrieved  party can approach the court by way of writ under Article 226  of the Constitution and the  court depending on facts of the said  case is empowered to grant the relief.  This judgment  in K.N.  Guruswamy  Vs.  The State of Mysore and others was  followed subsequently by this Court in  the case of The D.F.O,  South Kheri & Ors.  Vs. Ram Sanehi Singh [ 1971 (3) SCC   864]  wherein this Court  held:

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"By that order he has deprived  the  respondent of a valuable right.  We  are unable to hold that merely because  the source of the right which the  respondent claims was initially in a  contract, for obtaining relief against  any arbitrary and unlawful action on  the part of a public authority he must  resort to a suit and not to a petition by  way of a writ. In view of the judgment  of this Court in  K.N. Guruswamy’s  case (supra),  there can be no doubt  that the petition was maintainable,  even if the right to relief arose out of  an alleged breach of contract, where  the action challenged was of a public  authority invested with statutory  power." (Emphasis supplied)

       In the case of Gujarat State Financial Corporation  Vs  M/s. Lotus Hotels Pvt. Ltd. [1983 (3) SCC 379] this Court  following an earlier judgment in  R.D. Shetty  Vs.   International Airport Authority of India [1979 (3) SCC 489]  held:          "The instrumentality of the State which  would be ’other authority’ under Article 12  cannot commit breach of a solemn  undertaking to the prejudice of the other  party which acted on that undertaking or  promise and put itself in a disadvantageous  position. The appellant Corporation, created  under the State Financial Corporation Act,  falls within the expression of ’other  authority’ in Article 12 and if it backs out  from such a promise, it cannot be said that  the only remedy for the aggrieved party  would be suing for damages for breach and  that it could not compel the Corporation for  specific performance of the contract under  Article 226."  

       The learned counsel appearing for the first respondent  however, submitted that this Court has taken a different view in  the case of Life Insurance Corporation of India  Vs.  Escorts  Ltd. & Ors. [ 1986 (1) SCC 264]  wherein this Court held:

"If the action of the State  is related to  contractual obligations or obligations  arising out of the tort, the court may  not ordinarily examine it unless the  action has some public law character  attached to it. Broadly speaking, the  court will examine actions of State if  they pertain to the public law domain  and refrain from examining them if  they pertain to the private law field.   The difficulty will lie in demarcating  the frontier between the public law  domain and the private law field.  It is  impossible to draw the line with  precision and we do not want to  attempt it.  The question must be  decided in each case with reference to

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the particular action, the activity in  which the State or the instrumentality  of the State is engaged when   performing the action, the public law  or private law character of the action   and a host of other relevant  circumstances.  When the  State or an  instrumentality of the State ventures  into the corporate world and  purchases the shares  of a company, it  assumes to itself the ordinary role of a  shareholder, and dons the robes of a  shareholder, with all the rights  available to such  a shareholder.   There is no reason why the State as a  shareholder should be expected to  state its reasons when it seeks to  change the management, by a  resolution of the company, like any  other shareholder." (Emphasis  supplied).

We do not think this Court in the above case has, in any  manner, departed from the view expressed in the earlier  judgments in the case cited hereinabove. This Court in the case  of Life Insurance Corporation of India (Supra)  proceeded on  the facts of that case  and held that a relief by way of a writ  petition may not ordinarily be an appropriate remedy. This  judgment does not lay down that as a rule in matters of contract  the court’s jurisdiction under Article 226 of the Constitution is  ousted.   On the contrary, the use of the words "court may not  ordinarily examine it unless the action has some public law  character attached to it" itself indicates that in a given case, on  the existence of the required factual matrix a remedy under  Article 226 of the Constitution will be available.  The learned  counsel then relied on another judgment of this Court in the  case of State of  U.P. & Ors.  Vs. Bridge & Roof Company  (India) Ltd. [ 1996 (6) SCC 22]  wherein this Court held:  "Further, the contract in question  contains a clause providing inter alia  for settlement of disputes by reference  to arbitration.  The arbitrators can  decide both questions of fact as well  as questions of law.  When the  contract itself provides for a mode of  settlement of disputes arising from the  contract, there is no reason why the  parties should not follow and adopt  that remedy and invoke the  extraordinary jurisdiction of the High  Court under Article 226.   The  existence of an effective alternative  remedy - in this case, provided in the  contract itself - is a good ground for  the court to decline to exercise its  extraordinary jurisdiction under  Article 226."

This judgment again, in our opinion, does not help the  first respondent in the argument advanced on its behalf that in  contractual matters remedy under Article 226 of the  Constitution does not lie.  It is seen from the above extract that  in that case because of an arbitration clause in the contract, the  court refused to invoke the remedy under Article 226 of the

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Constitution. We have specifically inquired from the parties to  the present appeal before us and we have been told that there is  no such arbitration clause in the contract in question. It is well  known that if the parties to a dispute had agreed to settle their  dispute by arbitration and if there is an agreement in that regard,  the courts will not permit recourse to any other remedy without  invoking the remedy by way of arbitration unless of course both  the parties to the dispute agree on another mode of dispute  resolution. Since that is not the case in the instant appeal, the  observations of this Court in the said case of Bridge & Roof Co.  (supra) is of no assistance to the first respondent in its  contention that in contractual matters, writ petition is not  maintainable.   The learned counsel then contending that this Court will  not entertain a writ petition involving disputed questions of fact  relied on a judgment of this Court in the case of State of Bihar  & Ors. Vs. Jain Plastics and Chemicals Ltd. [2002 (1) SCC  216] wherein this Court held :  "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 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 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."

       A perusal of this judgment though shows that a writ  petition involving serious disputed questions of facts which  requires consideration of evidence which is not on record, will  not normally be entertained by a court in the exercise of its  jurisdiction under Article 226 of the Constitution of India. This  decision again, in our opinion, does not lay down an absolute  rule that in all cases involving disputed questions of fact the  parties should be relegated to a civil suit. In this view of ours,  we are supported by a judgment of this Court in the case of  Smt. Gunwant Kaur & Ors. vs. Municipal Committee,  Bhatinda and Ors. [1969 (3) SCC 769] where dealing with  such a situation of disputed questions of fact in a writ petition  this Court held :

"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

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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  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.  

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.  

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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       The above judgment of Smt. Gunwant Kaur (supra) finds  support from another judgment of this Court in the case of  Century Spinning and Manufacturing Company Ltd. &  Anr. vs. The Ulhasnagar Municipal Council & Anr. [1970  (1) SCC 582] wherein this Court held :   "Merely because a question  of fact is  raised, the High Court will not be  justified in requiring the party to seek  relief by the somewhat lengthy,  dilatory and expensive process by a  civil suit against a public body. The  questions of fact raised by the petition  in this case are elementary."

       This observation of the Court was made while negating a  contention advanced on behalf of the respondent-Municipality  which contended that the petition filed by the appellant- company therein apparently raised questions of fact which  argument of the Municipality was accepted by the High Court  holding that such disputed question of fact cannot be tried in the  exercise of the extraordinary jurisdiction under Article 226 of  the Constitution. But this Court held otherwise.            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  Smt.Gunwant Kaur (supra), this Court even went to the extent  of holding that in a writ petition, if facts required, 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.         The learned counsel for the respondent then placed  reliance on a judgment of this Court in the case of VST  Industries Ltd. vs. VST Industries Workers’ Union & Anr.  [2001 (1) SCC 298]. In the said case, this Court held :

"In Anadi Mukta case  this Court  examined  the various aspects and the  distinction between an authority and a  person and after analysis of the decisions  referred in that regard came to the  conclusion that it is only in the  circumstances when the authority or the  person performs a public function or  discharges a public duty that Article 226  of the Constitution can be invoked.  In  the present case, the appellant is engaged  in the manufacture and sale of cigarettes.   Manufacture and sale of cigarettes will  not involve any public function."

       Placing reliance on the observations of this Court in the  said case, learned counsel contended unless the action  challenged in the writ petition pertains to the discharge of a  public function or public duty by an authority, the courts will  not entertain a writ petition which does not involve the  performance of said public function or public duty. Learned  counsel argued in the instant case while repudiating the  contract, the first respondent was not discharging any public  function or public duty.

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       We do not think the above judgment in VST Industries  Ltd. (supra) supports the argument of the learned counsel on the  question of maintainability of the present writ petition. It is to  be noted that VST Industries Ltd. against whom the writ  petition was filed was not a State or an instrumentality of a  State as contemplated under Article 12 of the Constitution,  hence, in the normal course, no writ could have been issued  against the said industry. But it was the contention of the writ  petitioner in that case that the said industry was obligated under  the concerned statute to perform certain public functions,  failure to do so would give rise to a complaint under Article  226 against a private body. While considering such argument,  this Court held that when an authority has to perform a public  function or a public duty if there is a failure a writ petition  under Article 226 of the Constitution is maintainable. In the  instant case, as to the fact that the respondent is an  instrumentality of a State, there is no dispute but the question  is:  Was first respondent discharging a public duty or a public  function while repudiating the claim of the appellants arising  out of a contract ? Answer to this question, in our opinion, is  found in the judgment of this Court in the case of Kumari  ShriLekha Vidyarthi & Ors.  vs. State of U.P.& Ors. [1991  (1) SCC 212] wherein this Court held :         "The impact of every State action is also on  public interest. It is really the nature of its  personality as State which is significant and  must characterize all its actions, in whatever  field, and not the nature of function,  contractual or otherwise which is decisive of  the nature of scrutiny permitted for  examining the validity of its act. The  requirement of Article 14 being the duty to  act fairly, justly and reasonably, there is  nothing which militates against the concept  of requiring the State always to so act, even  in contractual matters."            

       It is clear from the above observations of this Court, once  State or an instrumentality of State is a party to the contract, it  has an obligation in law to act fairly, justly and reasonably  which is the requirement of Article 14 of the Constitution of  India. Therefore, if by the impugned repudiation of the claim of  the appellants the first respondent as an instrumentality of the  State has acted in contravention of the above said requirement  of Article 14 then we have no hesitation that a writ court can  issue suitable directions to set right the arbitrary actions of the  first respondent. In this context, we may note that though the  first respondent is a company registered under the Companies  Act, it is wholly owned by the Government of India. The total  subscribed share capital of this company is 2,50,000 shares out  of which 2,49,998 shares are held by the President of India  while one each share is held by the Joint Secretary, Ministry of  Commerce and Industry and Officer on Special Duty, Ministry  of Commerce and Industry respectively. The objects  enumerated in the Memorandum of Association of the first  respondent at Para 10 states :  "To undertake such functions as may be  entrusted to it by Government from time to  time, including grant of credits and  guarantees in foreign currency for the  purpose of facilitating the import of raw  materials and semi-finished goods for  manufacture or processing goods for  export."

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Para 11 of the said object reads thus :  "To act as agent of the Government, or with  the sanction of the Government on its own  account, to give the guarantees, undertake  such responsibilities and discharge such  functions as are considered by the  Government as necessary in national  interest."  

It is clear from the above two objects of the company that  apart from the fact that the company is wholly a Government  owned company it discharges the functions of the Government  and acts as an agent of the Government even when it gives  guarantees and it has a responsibility to discharge such  functions in the national interest. In this background it will be  futile to contend that the actions of the first respondent  impugned in the writ petition do not have a touch of public  function or discharge of a public duty. Therefore, this argument  of the first respondent must also fail.             The learned counsel for the respondent then contended  that though the principal prayer in the writ petition is for  quashing the letters of repudiation by the first respondent, in  fact the writ petition is one for a ’money claim’ which cannot  be granted in a writ petition under Article 226 of the  Constitution of India. In our opinion, this argument of the  learned counsel also cannot be accepted in its absolute terms.  This court in the case of U.P.Pollution Control Board & Ors.  vs. Kanoria Industrial Ltd. & Anr. [2001 (2) SCC 549] while  dealing with the question of refund of money in a writ petition  after discussing the earlier case law on this subject held : "In the para extracted above, in a  similar situation as arising in the  present cases relating to the very  question of refund, while answering  the said question affirmatively, this  Court pointed out that the courts have  made distinction between those cases  where a claimant approached a High  Court  seeking relief of obtaining  refund only and those where refund  was sought as a consequential relief  after striking down of the order of  assessment, etc.  In these cases also  the claims made for refund in the writ  petitions were consequent upon  declaration of law made by this Court.   Hence, the High Court committed  no  error in entertaining the writ petitions.  

In support of the submission  that a  writ petition seeking mandamus for  mere refund of money was not  maintainable, the decision in  Suganmal Vs. State of M.P. was cited.   In AIR para 6 of the said judgment,  it  is stated that - "We are of the opinion that though the  High Courts have power to pass any  appropriate order in the exercise of  the powers conferred under Article  226 of the Constitution, such a

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petition solely praying for the issue of  a writ of mandamus directing  the  State to refund the money is not  ordinarily maintainable for the simple  reason that a claim for such a refund  can always be made in a suit against  the authority which had illegally  collected the money as a tax".  

Again in AIR para 9, the Court held:  

"We, therefore, hold that normally  petitions solely praying for the refund  of money against the State by a writ  of mandamus are not to be  entertained.  The aggrieved party has  the right of going to the civil court for  claiming the amount and it is open to  the State to raise all possible defences  to the claim, defences which cannot,  in most cases, be appropriately raised  and considered in the exercise of writ  jurisdiction."

The judgment cannot be read as  laying down the law that no writ  petition at all can be entertained  where claim is made for only refund  of money consequent upon  declaration of law that levy and  collection of tax/cess as  unconstitutional or without the  authority of law.   It is one thing to  say that the High Court has no power  under Article 226 of the Constitution  to issue a writ of mandamus for  making refund of the money illegally  collected.  It is yet another thing to  say that such power can be exercised  sparingly depending on facts and  circumstances of each case.  For  instance, in the cases on hand where  facts are not in dispute, collection of  money as cess was itself without the  authority of law; no case of undue  enrichment was made out and the  amount of cess was paid under  protest; the writ petitions were filed  within a reasonable time from the date  of the declaration that the law under  which tax/cess was collected was  unconstitutional.  There is no good  reason to deny a relief of refund to the  citizens in such cases on the  principles of public interest and equity  in the light of the cases cited above.   However, it must not be understood  that in all cases where collection of  cess, levy or tax is held to be  unconstitutional or invalid, the refund  should necessarily follow.  We wish  to add that even in cases where  collection of cess, levy or tax is held  to be unconstitutional  or invalid,  refund is not an automatic

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consequence but may be refused on  several grounds depending on facts  and circumstances of a given case."

       Therefore, this objection must also fail because in a given  case it is open to the writ court to give such monetary relief  also.          From the above discussion of ours, 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 facts arise for  consideration, same cannot be a 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.   

       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  Corporation vs. Registrar of Trade Marks, Mumbai & Ors.  [1998 (8) SCC 1]. 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.  It is in the above understanding of law, we will now  consider the facts of the present case to find out whether the  appellants are entitled to relief or not as prayed for in the writ  petition filed by them. While considering this issue, it has to be noted at the outset  itself that the first respondent is an instrumentality of State for the  purpose of Article 12 of the Constitution is not disputed and rightly  too. It is also not disputed that the first respondent is a monopoly  Corporation in its field.  The fact that the appellant to the extent covered by the  contract of insurance had agreed to insure the risk of non payment  of its consideration for the tea exported to the Kazak Corporation  is also not disputed; The fact that the appellant has exported 8.70 lakh kilograms  of tea to Kazakhstan between 8th and 30th October, 1993 is also not  disputed. The fact that the Kazak Corporation did not pay the  consideration for the tea received by it in cash in US dollars is also  not disputed. The fact that the Kazakhstan Government stood as a  guarantor for prompt payment for the goods received by the Kazak  Corporation and that the said Government failed to honour its  guarantee is also not disputed. The fact that the Reserve Bank of India permitted the  appellant to receive cash consideration in the form of US $ instead  of barter payment is also not disputed. What is disputed is the obligation of the first respondent to  cover the risk of non-payment of consideration by cash in US  currency on the ground that the risk covered by the first respondent  is a risk arising out of non-supply of goods by the barter method

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only.  In our opinion, this limited area of dispute can be settled by  looking into the terms of the contract of insurance as well as the  export contract, and the same does not require consideration of any  oral evidence or any other documentary evidence other than what  is already on record. The claim of the contesting parties will stand  or fall on the terms of the contracts, interpretation of which, as  stated above, does not require any external aid. Therefore, we will now consider the relevant clauses of the  contracts in the background of the admitted facts recorded  hereinabove.  The contract of insurance between the appellant and the  respondent is primarily based on the contract between the exporter  and the Kazak Corporation. The relevant clause in regard to  payment for the tea exported is found in the principal contract at  Clause 6 which reads thus : "The payment of delivered goods shall be  made by barter exchange of goods within 120 days  from the date of delivery being affected by the  Seller. Plus interest for the period of non-payment  15% per year. The above terms will be covered by  a guarantee for payment by the Ministry of Foreign  Economic Relations of Kazakhstan. For Barter  exchange of goods Buyer presently has available  for offer goods as per supplement N2 to the  present contract."

This clause came to be amended on the very day when the  contract was signed by the exporter and the Kazak Corporation by  an addendum, i.e., on 26.8.1993 itself. The addendum which  formed an integral part of the original contract reads thus : "In case the payment terms as per clause 6  of the Contract No.1-B/9-14/93 dated 26.8.1993  are not possible that is to say if this contract for  barter supply of goods cannot be finalised for any  reason or if delivery shipment under such a  contract is not made within the stipulated period,  then the buyer shall pay the seller for delivered  goods in US Dollars within 120 days from the date  of delivery being effected by the seller. This  payment to be made through remittance by the  buyer of the contractual amount of delivered tea,  plus interest 15% per year to the Bank Account of  the seller at Canara Bank, Janpath, New Delhi,  India.  

The above payment will be guaranteed by  the Ministry of Foreign Economic Relations of  Kazakhstan."

If we read the original Clause 6 and the addendum  together, it is crystal clear that for some reason or the other the  parties agreed to amend original Clause 6 by the addendum  which amendment brought about a significant change in the  mode of payment of consideration. In the original Clause 6, it is  seen that the Kazak Corporation agreed to pay for the delivered  tea by barter of goods. This sole mode of consideration came to  be altered by the addendum by which parties agreed if the  payment of consideration by barter of goods cannot be finalised  for any reason, the buyer that is the Kazak Corporation agreed  to make the said payment in US $ within the stipulated period  of 120 days of the delivery by the exporter. This addendum  replaced the original clause (6) and from the language of the  addendum it is clear that the amended clause (6) became an  integral part of the original contract in the place of the original

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clause (6). The language of addendum clearly shows that the  payment of consideration by barter supply of goods was no  more the sole mode of consideration and if for any reason  whatsoever such payment by barter did not materialise between  the parties then the payment had to be made in cash in US $. In  our opinion, there can be no two possible interpretations as to  the meaning of this amending clause (addendum). This was also  the understanding of the Kazakhstan Corporation which is  established by the fact that after the failure of barter it did pay a  part of consideration in US$, this is also the understanding of  the Government of Kazakhstan which guaranteed the payment  of such consideration which is evident from the letter of the  Ministry of Foreign Economic Relations of the Republic of  Kazakhstan dated 18th March, 1994. In the said letter the said  Government while admitting the default in payment of  consideration in clear terms stated:  "But some difficulties related to  introduction of the national currency, execution of  primary internal payments between enterprises  and budgetary deficit prevented the Kazak Party  from timely repaying of the credit."  

It is clear that the first respondent insured the risk of non- payment arising out of the above said contract between the  exporter and the Kazak Corporation which included the amended  Clause (6). It is also clear that the first respondent while issuing the  policy of insurance did know that payment of consideration by  Kazak Corporation could be by two modes (a) by barter (b) by  cash and non payment of consideration by either mode was to be  covered by the said contract of insurance.  It is also an admitted fact that the Kazak Corporation did  offer only some goods and not all items included in the schedule to  the appellants initially as a barter payment, but on evaluation made  by the appellants, they were not acceptable to the appellants.  Therefore, payment of consideration by barter of goods could not  be finalised as contemplated in amended clause (6) of the export  contract and in lieu of the same, the Kazak Corporation agreed to  pay in US $ and in fact did make part payment of the same in US  $, but thereafter it defaulted in the payment of the balance amount.  It is also an admitted fact that the Kazakhstan Government which  guaranteed the payment of consideration for the exported goods  while admitting its liability also defaulted for its own reasons,  consequently the appellants could not get the full consideration for  the tea exported by them.         It is on the above fact-situation, the appellants made a  demand on the first respondent to compensate for the loss suffered  by them as per their claim dated 8.9.1994. This claim of the  appellants came to be repudiated by the first respondent as per its  letter dated 14.12.1994. The basis of the repudiation of the claim as  could be seen from the said letter is as follows :         "The buyer also did offer goods in barter  exchange. You, however, chose without consulting  the Corporation not to import the goods offered by  the buyer may be for trade reasons. As a result, the  bills have remained unpaid. This is clearly a trade  loss which is not covered by the Corporation. We  are, therefore, not in a position to entertain your  claim, which is hereby rejected."    

It is seen from this letter that the repudiation was made on  the ground that the appellants did not accept the goods offered by  the buyer without consulting the first respondent. The further  ground is that the loss suffered by the appellants was a trade loss  which is not a risk covered by the Corporation. On a protest made

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against the said repudiation of the claim by the appellants, the first  respondent reiterated its stand of rejection of the claim by another  letter of its dated 26th May, 1995, wherein it stated that as per its  letter dated 12.10.1993, it had covered the risk of non-payment  by  barter only and said mode of payment was changed by the  appellants without prior consultation with the first respondent,  therefore, this change amounted to a breach of an insurance  agreement, hence, it had no liability for the loss suffered by the  appellants.  Having known the stand of the first respondent in regard to  its liability under the policy and having failed in its other attempts  to persuade the first respondent to make payments, the appellants  filed the writ petition before the learned Single Judge of the High  Court and the said learned Judge came to the conclusion that on  facts and circumstances of the case since the first respondent was  admittedly an instrumentality of State, a writ petition was  maintainable. It also came to the conclusion that since most of the  facts involved in the case were admitted and the dispute resolved  only around the interpretation of the agreement of insurance  between the parties, the learned Judge felt that the matter could be  disposed of in a writ petition without driving the parties to a suit.  Having perused the relevant clauses the learned Single Judge held : "There cannot be any doubt that barter  system of payment was adhered to but the  addendum clause in the contract clearly stipulates  a situation that in the event same cannot be agreed  upon, there could be a default if Kazakhstan  Government failed to pay in terms of its guarantee  to the first respondent in US$. Default clause  appears to be unequivocal".

Thereafter the learned Single Judge having perused the  various correspondence between the parties and noticing the fact  that the Kazakhstan Government also admitted its failure to  comply with its guarantee came to the conclusion that there was  nothing on record to show that the appellants under the contract of  insurance was liable to consult the first respondent as regards its  right to reject the payment by barter for any reason whatsoever. On  such interpretation of the clauses of the contracts, the learned  Judge felt that it was an appropriate case in which a writ should be  issued as prayed for by the petitioner and accordingly allowed the  petition. In appeal, the Appellate Bench took somewhat a restricted  view of the power of the High Court to entertain a writ petition  under Article 226 of the Constitution of India and came to the  conclusion that the petition involved disputed questions of fact,  hence, there being an alternate remedy by way of a suit allowed the  appeal setting aside the judgment as also the relief granted by the  trial court. In the course of its judgment the appellate bench also  placed reliance on sub-clause (d) of the proviso to clause (xi)  found in the contract of insurance which reads thus: "PROVISOS PROVIDED ALWAYS THAT the  Corporation shall not be liable for any loss:

x x x x x

(d) Which arises due to the failure or refusal  on the part of the buyer to accept the goods and/or  to pay for them due to his claim that he is justified  in withholding payment of the contract price or the  gross invoice value of the said goods or any part  thereof by reason of any payment, credit, set-off or  counter-claim and/or due to his claim that, for any  other reason, he is excused from performing his

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obligations under the contract, unless, except  where the Corporation agrees in writing to the  contrary, the insured has, for the amount of his  loss, obtained by legal proceedings in a competent  court of law in the country of the buyer a final  judgment enforceable against him." (emphasis  supplied)

According to the Appellate Bench as per this proviso in  the insurance contract, the first respondent was not liable for  any loss which arises due to the failure or refusal on the part of  the appellants to accept goods offered by the buyer. Though this  interpretation of the said proviso to the insurance clause made  by the Appellate Bench is not a conclusive finding, we think it  appropriate to deal with this view expressed by the Appellate  Bench since we intend to dispose of this appeal on merits.  Having examined the said sub-clause in the proviso of the  insurance policy, in our opinion, the reliance placed by the  appellate bench of the High Court on this clause is wholly  misplaced. The proviso especially the one in sub-clause (d)  deals with the risks arising due to the failure or refusal on the  part of the buyer to accept the goods and/or to pay for them due  to his claim that he is justified in withholding payment of the  contract price or the gross invoice value of the said goods for  the reason mentioned therein. This clause pertains to the  defence that may be put forth by the buyer (in this case the  Kazak Corporation) as to its refusal to pay the consideration on  the grounds enumerated in the said sub-clause. This is not a  clause which indemnifies the insurance company from its  liability to cover risk when the importer fails to pay for the  consideration for the goods received by it on grounds of its  financial inability. Therefore the reliance placed by the High  Court on this sub-clause to the proviso in the insurance  contract, as stated above, is misplaced. The learned counsel appearing for the appellants in this  appeal contended that the one and the only stand taken by the  appellants in their two letters of repudiation is that the  appellants have changed the mode of receipt of consideration  without consulting the first respondent which ground according  to the learned counsel is not one of the conditions of the  insurance contract. He further submitted that an imposition of a  condition of that nature requiring a prior consultation would be  beyond the terms of the insurance contract, therefore,  impermissible. While learned counsel appearing for the first  respondent Corporation contended that the ground of  repudiation is not so much the lack of prior consultation but,  according to learned counsel, is that the first respondent was not  liable to pay for the loss suffered by the exporter by agreeing to  accept the consideration in cash because that mode of  consideration was not covered by the risk insured by the  respondent. According to the learned counsel, one and the only  mode of payment of consideration covered by the said  respondent is by barter of goods. Therefore, even though in the  letters of repudiation the prior consultation before change in the  mode of consideration is pointed out as one of the grounds, the  same is not the primary ground.   From the terms of the contract, we have noticed in Clause  (6) as amended by the addendum, consideration by way of  barter of goods is not the sole consideration. The said clause  contemplates alternate modes of payment of consideration one  of them being by barter of goods and the other by cash payment  in US $. The terms of the insurance contract which was agreed  between the parties were after the terms of the contract between

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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 have 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. This is clear from the  terms of the insurance contract read with the letter of the first  respondent dated 8th September, 1993 wherein at Clause 3A, it  is stated : "Our liability will arise only after default has been  established on the guarantee of the Ministry." From the above,  it is clear both the grounds as put forth by the learned counsel  for the respondent before us as well as in the two letters of  repudiation issued by the first respondent are unsustainable. In  our opinion, the first respondent insured the export risk of the  appellants in regard to the non payment of the consideration for  the tea exported whether it arose from the non fulfillment of the  barter clause or for the non fulfillment of the cash payment  clause. The argument advanced on behalf of the respondent that  the appellants refused to accept the barter by goods offered by  the first respondent which amounted to a default under the  contract on the part of the appellants has no legs to stand in  view of the clear language of the amended Clause 6 of the  agreement which as noted above states that the obligation of the  buyer, namely, Kazak Corporation to pay for the goods  received by it in US $ arises when payment by barter fails for  "any reason whatever". The use of the words "any reason  whatever" in the said amended clause includes the reasons of  refusal by the appellants to accept the goods offered in barter.  On the face of the said language of amended clause, there could  be no room for two opinions at all in regard to the liability of  the first respondent to pay for the loss suffered by the appellants  even in cases where payment by barter fails at the instance of  the appellant. The learned counsel for the respondent contended  for a correct interpretation of this amended clause and the other  clauses of the contracts i.e. the contract of export and the  contract of insurance between the parties there is need for oral  evidence being led without which a proper interpretation of this  clause is not possible, therefore, it is fit case in which the  appellants should be directed to approach the Civil Court to  establish its claim. We find no force in this argument. 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 disputed fact. If such objection as to  disputed questions or interpretations are 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. We have already noted the decisions of this court  which in clear terms have laid down that mere existence of  disputed questions of fact ipso facto does not prevent a writ  court from determining the disputed questions of fact. (See:

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Gunwant Kaur (supra)).         On the basis of the above conclusion of ours, the question  still remains why should we grant the reliefs sought for by the  appellant in a writ petition when a suitable efficacious alternate  remedy is available by way of a suit. The answer to this  question in our opinion, lies squarely in the decision of this  Court in the case of ShriLekha Vidyarthi (supra) wherein this  court held :        "The requirement of Article 14 should  extend even in the sphere of contractual  matters for regulating the conduct of the  State activity. Applicability of Article 14 to  all executive actions of the State being  settled and for the same reason its  applicability at the threshold to the making  of a contract in exercise of the executive  power being beyond dispute, the State  cannot thereafter cast off its personality and  exercise unbridled power unfettered by the  requirements of Article 14 in the sphere of  contractual matters and claim to be governed  therein only by private law principles  applicable to private individuals whose  rights flow only from the terms of the  contract without anything more. The  personality of the State, requiring regulation  of its conduct in all spheres by requirement  of Article 14, does not undergo such a  radical change after the making of a contract  merely because some contractual rights  accrue to the other party in addition. It is not  as if the requirement of Article 14 and  contractual obligations are alien concepts,  which cannot co-exist. The Constitution  does not envisage or permit unfairness or  unreasonableness in State actions in any  sphere of its activity contrary to the  professed ideals in the Preamble. Therefore,  total exclusion of Article 14 - non- arbitrariness which is basic to rule of law -   from State actions in contractual field is not  justified. This is more so when the modern  trend is also to examine the  unreasonableness of a term in such contracts  where the bargaining power is  unequal so  that these are not negotiated contracts but  standard form contracts between unequals. x  x x

Unlike the private parties the State  while exercising its powers and discharging  its functions, acts indubitably, as is expected  of it, for public good and in public interest.  The impact of every State action is also on  public interest. It is really the nature of its  personality as State which is significant and  must characterize all its actions, in whatever  field, and not the nature of function,  contractual or otherwise, which is decisive  of the nature of scrutiny permitted for  examining the validity of its act. The  requirement of Article 14 being the duty to  act fairly, justly and reasonably, there is  nothing which militates against the concept  of requiring the State always to so act, even

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in contractual matters. This factor alone is  sufficient to import at least the minimal  requirements of public law obligations and  impress with this character the contracts  made by the State or its instrumentality. It is  a different matter that the scope of judicial  review in respect of disputes falling within  the domain of contractual obligations may  be more limited and in doubtful cases the  parties may be relegated to adjudication of  their rights by resort to remedies provided  for adjudication of purely contractual  disputes. However, to the extent, challenge  is made on the ground of violation of Article  14 by alleging that the impugned act is  arbitrary, unfair or unreasonable, the fact  that the dispute also falls within the domain  of contractual obligations would not relieve  the State of its obligation to comply with the  basic requirements of Article 14. To this  extent, the obligation is of a public character  invariably in every case irrespective of there  being any other right or obligation in  addition thereto. An additional contractual  obligation cannot divest the claimant of the  guarantee under Article 14 of non- arbitrariness at the hands of the State in any  of its actions. x x x "

       From the above, it is clear that when an instrumentality  of the State acts contrary to public good and public interest,  unfairly, unjustly and unreasonably, in its contractual,  constitutional or statutory obligations, it really acts contrary to  the constitutional guarantee found in Article 14 of the  Constitution. Thus if we apply the above principle of  applicability of Article 14 to the facts of this case, then we  notice that the first respondent being an instrumentality of State  and a monopoly body had to be approached by the appellants  by compulsion to cover its export risk. The policy of insurance  covering the risk of the appellants was issued by the first  respondent after seeking all required information and after  receiving huge sums of money as premium exceeding Rs.16  lacs. On facts we have found that the terms of the policy does  not give room to any ambiguity as to the risk covered by the  first respondent. We are also of the considered opinion that the  liability of the first respondent under the policy arose when the  default of the exporter occurred and thereafter when  Kazakhstan Government failed to fulfil its guarantee. There is  no allegation that the contracts in question were obtained either  by fraud or by misrepresentation. In such factual situation, we  are of the opinion, the facts of this case do not and should not  inhibit the High Court or this Court from granting the relief  sought for by the petitioner.     Apart from the above reasons given by us to interfere with  the judgment of the Appellate Bench of the High Court, we have  one other good reason - why we should not drive the appellants to  a suit. The claim of the appellants was rejected by the respondent  in the year 1994. The respondent challenged the basis of rejection  by way of a writ petition in the year 1996. The objection as to the  maintainability of the petition was rejected by the High Court by  its judgment dated 15.5.1997. We are now in the end of year 2003.  We at this distance of time and stage of litigation, do not think it  proper to relegate the parties to a suit. To direct the appellants to  approach a civil court at this stage would be doing injustice to the

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appellants. In this view of ours, we are supported by a number of  decisions of this court like in Shambhu Prasad Agarwal & Ors. vs.  Bhola Ram Agarwal (2000 9 SCC 714), wherein this Court though  noticed the fact that the appellants had an alternate remedy for  issuance of a letter of administration it refused to dismiss the  appeal on the grounds - "Since considerable time has elapsed the  interest of justice demands that the proceeding  should come to an end as early as possible and that  the appeal should not be dismissed merely on  highly technical ground".  

In Dr.Bal Krishna Agarwal vs. State of U.P. & Ors. (1995  (1) SCC 614) this Court held : "Having regard to the aforesaid facts and  circumstances, we are of the view that the High  Court was not right in dismissing the writ petition  of the appellant on the ground of availability of an  alternate remedy under Section 68 of the Act  especially when the writ petition that was filed in  1988 had already been admitted and was pending  in the High Court for the past more than 5 years.  Since the question that is raised involves a pure  question of law and even if the matter is referred to  the Chancellor under Section 68 of the Act it is  bound to be agitated in the court by the party  aggrieved by the order of the Chancellor, we are of  the view that this was not a case where the High  Court should have non-suited, the appellant  on the  ground of availability of an alternative remedy.  We, therefore, propose to go into the merits of the  question regarding inter se seniority of the  appellant and Respondents 4 and 5. We may, in  this context, mention that Respondent 4 has  already retired in January 1994."

       Similar is the view taken by the Court in the case of  Kerala  State Electricity Board & Anr. vs. Kurien E.Kalathil and Ors.  (2000 6 SCC 293) and also in VST Industries Ltd. (supra).         For the reasons stated herein above, we think the appellate  bench of the High Court was not justified in reversing the  judgment of the learned Single Judge. For the reasons stated above,  the impugned judgment of the appellate bench of the High Court is  set aside and that of the learned Single Judge is restored. The  appeal is allowed with costs.                                     

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