SC: Writs are impermissible when the right sought is merely contractual

The Hon’ble Supreme Court, on 18th March 2020, in the matter of The Bharat Coking Coal Ltd. & Ors. v. AMR Dev Prabha & Ors. pronounced that writs are impermissible when the allegation is solely with regard to violation of a contractual right or duty. Hence, the persons seeking writ relief must also actively satisfy the Court that the right it is seeking is one in public law, and not merely contractual.

The Hon’ble Supreme Court observed that:

Constitutional courts are concerned only with lawfulness of a decision, and not its soundness. Phrased differently, Courts ought not to sit in appeal over decisions of executive authorities or instrumentalities. Plausible decisions need not be overturned, and latitude ought to be granted to the State in exercise of executive power so that the constitutional separation of powers is not encroached upon. (Para 29)

However, allegations of illegality, irrationality and procedural impropriety would be enough grounds for courts to assume jurisdiction and remedy such ills. This is especially true given our unique domestic circumstances, which have demonstrated the need for judicial intervention numerous times. Hence, it would only be the decision­making process which would be the subject of judicial enquiry, and not the end result (save as may be necessary to guide determination of the former). (Para 29)

But merely because the accusations made are against the State or its instrumentalities doesn’t mean that an aggrieved person can bypass established civil adjudicatory processes and directly seek writ relief. (Para 31)

In determining whether to exercise their discretion, writ courts ought not only confine themselves to the identity of the opposite party but also to the nature of the dispute and of the relief prayed for. Thus, although every wrong has a remedy, depending upon the nature of the wrong there would be different forums for redress. (Para 31)

In cases where a constitutional right is infringed, writs would ordinarily be the appropriate remedy. In tender matters, such can be either when a party seeks to hold the State to its duty of treating all persons equally or prohibit it from acting arbitrarily; or when executive actions or legislative instruments are challenged for being in contravention to the freedom of carrying on trade and commerce. (Para 32)

Writs are impermissible when the allegation is solely with regard to violation of a contractual right or duty. Hence, the persons seeking writ relief must also actively satisfy the Court that the right it is seeking is one in public law, and not merely contractual. (Para 32)

In doing so, a balance is maintained between the need for commercial freedom and the very real possibility of collusion, illegality and squandering of public resources. (Para 32)

Judicial intervention by itself has effects of time and money, which if unchecked would have problematic ramifications on the State’s ability to enter into contracts and trade with private entities. Further, it is not desirable or practicable for courts to review the thousands of contracts entered into by executive authorities every day. Courts also must be cognizant that often­ a ­times the private interest of a few can clash with public interest of the masses (Para 34)

It is thus imperative that in addition to arbitrariness, illegality or discrimination under Article 14 or encroachment of freedom under Article 19(1)(g), public interest too is demonstrated before remedy is sought. Although the threshold for the latter need not be high, but it is nevertheless essential to prevent bypassing of civil courts and use of constitutional avenues for enforcement of contractual obligations. (Para 35)

Judicial interpretation of contracts in the sphere of commerce stands on a distinct footing than while interpreting statutes. (Para 51)

Copy of judgment: Judgement_18-Mar-2020

-Adv. Tushar Kaushik

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