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Delhi High CourtIndian Cases

Suresh Kumar Jain vs The Hon’Ble Lt. Governor And Ors. on 7 August 2006

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Delhi High Court
Suresh Kumar Jain vs The Hon’Ble Lt. Governor And Ors. on 7 August, 2006
Equivalent citations: 2006(2)CTLJ197(DEL), 132(2006)DLT93
Author: S. Ravindra Bhat
Bench: S. Ravindra Bhat

S. Ravindra Bhat, J.

1. The petitioner claims a writ or direction to quash a decision of the second and third respondent (hereafter referred to as “the DDA”) stopping or withholding the supply Laminated Veneer Lumber (LVL) Doors, Shutters and Windows for the construction of its housing project at Bakkarwala, Narela (Group-I & II) and Sector-1, Rohini.

2. It is alleged that in 1993, the Central Government decided to ban use of timber for the purpose of building construction works; instead, it directed the use of wood substitute materials, in such works. It is claimed by the petitioner that a Five-Member Committee was constituted by the DDA for deciding the use of wood substitute materials in its construction work. The petitioner, a manufacturer of Laminated Veneer Lumber (LVL) doors and shutters etc. applied for registration of its trade mark which was issued on 16.8.2004 under the Trade Mark Act, 1999. In the meanwhile, on 19.4.2001, the DDA by its circular decided to use LVL doors in place of wood substitute materials in its housing constructions.

3. The petitioner claims that on 15.7.2002, the Superintending Engineer (TADCELL), Central Public Works Department, granted approval to its firm i.e. Mod Wood Doors for use of LVL products. It is averred that on 30th June, 2003, by an order the DDA approved the petitioner’s firm for manufacture and supply of LVL doors, shutters of TADCELL at Turnkey Housing Projects. It is claimed that between March and May 2004 agreements in writing were executed by the petitioner with approved contractors of the DDA, namely, M/s. Sewa Sons Builders for supply of Mod Wood Brand Rubber Wood LVL Doors in DDA constructions, subject to clearance in tests conducted by the DDA as per TADS 15-1995 at site. The work was to be carried out to the satisfaction of the purchaser’s site Engineer and the Engineer In-charge of the DDA. It is alleged that pursuant to this up to July 2004, more than 5,000 LVL doors were manufactured and supplied for the purpose of DDA’s construction.

4. On 20.7.2004, the DDA issued a letter to its contractor, which had placed an order upon the petitioner, referring to the products supplied to it stating that all parameters except two tests, namely, Screw Holding Power and strength of Glue Shear had been achieved. As per reports of the Central Building Research Institute, to which the DDA had referred the petitioner’s products for evaluation, most of the parameters were satisfied except the Glue Shear Strength. It was indicated that the test values in respect of that parameter was 41% lower than the prescribed minimum value in TADS.

5. It is claimed that the DDA sought to give effect to that evaluation and directed that the petitioner’s products ought not to be accepted as a result of which it is suffered grave and exorbitant losses. The DDA’s decision has been attacked as arbitrary and vitiated on account of non-application of mind. It is alleged that the glue shear test is inapplicable to LVL products as testified by Government Laboratories such as Institute of Wood Science and Technology, Bangalore and Indian Plywood Industries Research and Training Institute, Bangalore. The extract of IS Code-1734 Part-IV-1972 have also been relied upon, to say that the nature of the product is such that the glue shear strength is irrelevant.

6. The petitioner has disclosed that he had approached this Court on two earlier occasions in writ proceedings which were allowed to be withdrawn, with liberty to file fresh writ petition on the same cause of action.

7. The DDA in its return as denied liability; it has relied upon provisions of the contract entered into between the petitioner and the concerned contractor to say that it does not have any privity of contract with the petitioner. It is also claimed that the dispute pertains to performance of contract which contains an arbitration clause which would be the appropriate remedy having regard to the nature of controversy in this case.

8. It is averred that the inapplicability of TADS 15-1995 specification cannot be set up in any case because those specifications were referred to expressly in the contracts entered into, for supply of LVL doors. It is also averred that the materials supplied by the petitioner, failed to conform to the standard agreed and applicable; as a result the DDA rejected the products.

9. Mr. Sanjay Goel, learned Counsel contended that the DDA has acted in an arbitrary and unreasonable manner in relying on the reports of the CBRI and proceedings on the assumption that the glue shear test is applicable. It was urged that a letter dated 20.7.2004 shows that DDA granted relaxation as regards that standard. Learned Counsel contended that the nature of the glue shear test and the standard prescribed, ruled out its application in this case; the test was applicable to to plywoods/laminated woods and not LVL doors which are manufactured with a different technology. The DDA was aware of this and on 30.6.2003 it accepted the correct position. It is claimed that the petitioner’s position was vindicated by at least two other autonomous and Government Institutes, whose opinions are on record.

10. Learned Counsel urged that the DDA has in effect discriminated against the petitioner because in the case of other manufacturers the acceptable glue shear limit was 1329N whereas in the present case it was kept at 3750N. Learned Counsel urged that this as well as the letter dated 20th July, 2004 clearly points to the double standards adopted by the DDA.

11. Learned Counsel relied upon the opinion of the Institute of Wood Science and Technology, Bangalore that glue shear strength as per IA:1734 (Part-IV) 1983 is designed for plywood, where grain of adjoining veneer layers were mutually perpendicular whereas in LVL grains of all veneer layers are unidirectional. The test was therefore held to be inapplicable to LVL. It was urged that the materials on record amply justified a finding that the DDA has arbitrarily and with malicious intent, refused to accept the supplies by the petitioner even after accepting that the goods were up to the mark.

12. Mr. Bhupesh Narula, learned Counsel for the DDA submitted that the petitioner could not maintain the present writ petition as there was no privity of contract between it and the DDA. The contract or agreement to supply materials for construction of flats and other accessories, was as between the contractor and the DDA. The contractor entered into separate arrangement with the suppliers such as the petitioner. Those contracts admittedly contained arbitration clauses; hence the petitioner could not approach this Court and seek enforcement of its contractual rights.

13. It was next urged that the dispute in these proceedings cannot be the subject matter of writ proceedings as it pertains to disputed questions of fact relating to civil or contractual issues which are best left for determination in civil proceedings; after adducing oral and documentary evidence. It was also submitted that besides the glue shear strength, the petitioner’s products did not also conform to other standards and parameters and, therefore, DDA was justified refusing to accept the supply. It was submitted that if the goods were not of required quality and standard, the DDA would have to incur heavy expenditure in replacing them.

14. Learned Counsel placed reliance on the judgments reported as Rukmanibai v. Collector, Jabalpur and Bareilly Development Authority v. Ajay Pal Singh in support of the submission that the disputes ought not to be adjudicated in proceedings under Article 226 of the Constitution of India.

15. The first question to be decided is whether the petitioner cannot maintain independent proceedings against the DDA, being a sub-contractor with no privity of contract. Undoubtedly, there is no contractual relationship between the DDA and the petitioner; the contract or agreement is between the Contractor, and the supplier/ manufacturer, viz the petitioner. In that sense, the DDA is correct in contending that there is no privity of contract as between it and the petitioner. Yet, that factor alone cannot be decisive in arriving at a conclusion as to whether the petitioner can be aggrieved by the action, or inaction of the DDA. There is no gainsaying, and nor was it urged on behalf of the DDA, that it was always aware that the goods to be supplied to it, were those of the petitioner. It had indicated the standards. Although the petitioner was not a party, to the contract, its economic interests were vitally affected, and indeed dependant upon the DDA’s continued acceptance of its products. Absence of a direct contractual relationship, did not absolve the DDA from taking into consideration the rights and obligations of the petitioner in its contract with the Contractor. The contractor has chosen not to contest the determination of the DDA about rejection of the petitioner’s product. That leaves the petitioner with no occasion to ventilate its grievances. In Cantonment Board, Dinapore v. Taramani Devi AIR 1992 SC 61,the Supreme Court had ruled that where the real affected party on account of a public authority’s decision was not a party to the contract with it, its right to approach the court, could not be denied. On a parity of reasoning, I am of opinion that the petitioner cannot be deprived of his right to approach the court, to challenge the action of DDA; he has sufficient locus standi.

16. The finding about locus standi itself does not conclude the dispute. The next question is whether the factual background is such as to admit of adjudication under Article 226 of the Constitution of India. The disputes are contractual. No doubt, the DDA is a public authority amenable to writ jurisdiction. Yet, not all disputes with such public authorities can be adjudicated by a writ court, merely because of such status. Questions relatable to fairness in decision making, illegality etc, at contract formation stage may appropriately be gone into; however, after the contract is entered into, the decision of one of the parties, i.e. either the citizen or private concern, or the public authority which entered into the contract, to act on the basis of perceived contractual rights, ought not to be ordinarily the subject matter of scrutiny under Article 226 of the Constitution. This is because of the time tested applicability of the principle that contractual disputes, and issues involving disputed questions of fact, requiring examination of evidence, should be left for adjudication by the civil courts.

17. In State of Himachal Pradesh v. Raja Mahendra Pal , the Supreme Court held as follows:

powers conferred upon the High Court under Article 226 of the Constitution are discretionary in nature which can be invoked for the enforcement of any fundamental right or legal right but not for mere contractual rights arising out of an agreement particularly in view of the existence of efficacious alternative remedy. The Constitutional Court should insist upon the party to avail of the same instead of invoking the extraordinary writ jurisdiction of the Court.
It was again held in State of Bihar v. Jain Plastics & Chemicals Ltd. , that:
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 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 t 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 an properly instituted civil suit rather than by a Court exercising prerogative of issuing writs.
A similar view was expressed recently, in defense Enclave Residents Society v. State of UP .
18. The petitioner asserts that the decision of DDA to reject its product is incorrect and arbitrary; it has relied upon test reports, of two laboratories/ institutions. The DDA, on the other hand, contends that the standards were known, and a matter of contract; it has disputed that the petitioner’s product measured up to the agreed standards, or even as per the standards indicated in law. The contract entered into by the petitioner contains an arbitration clause; the DDA’s decision was taken in the course of purely commercial dealings, in the realm of contract. I am of the opinion that in these circumstances, it would be hazardous for the court to adjudicate the disputes in writ proceedings. All the questions raised involve examination of evidence, some of it technical, which the court would be ill equipped to analyze, having regard to the nature of writ proceedings.

19. In the light of the above discussion, I am of the opinion that this is not a fit case for exercise of jurisdiction under Article 226 of the Constitution of India. This will however, not preclude the petitioner from approaching the appropriate forum or court, to ventilate his grievances; in that case, the court/ forum would decide the dispute, in accordance with law, uninfluenced by the observations made in this judgment. The writ petition is dismissed, subject to the liberty mentioned. No costs.