2004 (4) TMI 527 - SC - Indian Laws

Supreme Court Rules on Jurisdiction, Contract Performance, and Liability

National Textile Corpn. Ltd. & Others Versus M/s Haribox Swalram & Others

The Supreme Court held that the Calcutta High Court lacked jurisdiction to hear the case as the cause of action did not arise within its territorial ... Whether a parties' claim had to be acceded to now after a lapse of six years raised a point of proprietary and also loss of Rs. 40.70 lakhs to NTC? Whether sale contracts were made in the manner indicated and were acted upon by the mills concerned was a question of fact which had to be established by evidence? Held that:- Appeal dismissed. We are also in agreement with the view taken by the learned Single Judge that the writ petition which was filed in December 1989 was highly belated as the claim of the writ petitioners had been categorically refuted by the letter dated 7.11.1990 by the Director Finance on behalf of National Textile Corporation (South Maharashtra). The petition was therefore liable to be rejected on this ground alone. That apart, the prayer made in the writ petition is for issuance of a writ of mandamus directing the appellant herein to supply the goods (cloth). It is well settled that in order that a mandamus be issued to compel the authorities to do something, it must be shown that there is a statute which imposes a legal duty and the aggrieved party has a legal right under the Statute to enforce its performance. The present is a case of pure and simple business contract. The writ petitioners have no statutory right nor any statutory duty is cast upon the appellants whose performance may be legally enforced. No writ of mandamus can, therefore, be issued as prayed by the writ petitioners. Issues Involved:1. Jurisdiction of the Calcutta High Court.2. Specific performance of the contract.3. Validity of the writ petition.4. Liability of the Central Government or Custodian for pre-takeover contracts.5. Admissibility and authenticity of the letter dated 24.10.1989.6. Delay in filing the writ petition.7. Issuance of a writ of mandamus.Issue-wise Detailed Analysis:1. Jurisdiction of the Calcutta High Court:The Division Bench of the Calcutta High Court held that it had jurisdiction to hear the matter as part of the cause of action accrued there. However, the Supreme Court found this view erroneous. The Court stated that the textile mills were situated in Bombay, the supply was to be made ex-factory at Bombay, and the alleged payments were also made at Bombay. The mere fact that the writ petitioner carried on business at Calcutta or that replies to the correspondence were received at Calcutta did not constitute an integral part of the cause of action. Therefore, the Calcutta High Court had no jurisdiction to entertain the writ petition.2. Specific Performance of the Contract:The Division Bench opined that there was no absolute bar in issuing a writ of mandamus for specific performance of a contract. However, the Supreme Court disagreed, emphasizing that the case involved highly disputed questions of fact that required evidence, which could only be established in a properly constituted suit, not in a writ petition.3. Validity of the Writ Petition:The writ petition sought specific performance of disputed contracts, which should be obtained by filing a regular suit. The Supreme Court noted that the writ petition was not maintainable as it involved several disputed questions of fact. The learned Single Judge had directed the writ petitioners to produce the original contracts, but they failed to comply, providing only a xerox copy of a printed proforma, which did not establish the contract or advance payments.4. Liability of the Central Government or Custodian for Pre-takeover Contracts:Under Section 3(7) of the Textile Undertakings (Taking Over of Management) Act, 1983, any liability incurred by a textile company before the appointed day is enforceable against the textile company, not the Central Government or the Custodian. The Supreme Court held that the liability incurred by the textile mills before the appointed day could not be enforced against the Central Government or the Custodian, rejecting the Division Bench's view that it was not a liability of the textile company.5. Admissibility and Authenticity of the Letter Dated 24.10.1989:The letter dated 24.10.1989, allegedly written by the Chairman-cum-Managing Director of NTC, was filed more than five years after the writ petition. The Supreme Court found the letter to be of extremely suspicious character, noting that it was an internal communication and there was no reason for Mr. Sundaram to hand over a copy to the writ petitioners. The letter was not an admission of liability and could not be taken into consideration.6. Delay in Filing the Writ Petition:The writ petition was filed in December 1989, while the claim had been refuted by a letter dated 7.11.1990. The Supreme Court agreed with the learned Single Judge that the petition was highly belated and liable to be rejected on this ground alone.7. Issuance of a Writ of Mandamus:The Supreme Court reiterated that a writ of mandamus could not be issued for the specific performance of a business contract in the absence of a statutory duty. The writ petitioners had no statutory right, and no statutory duty was cast upon the appellants whose performance could be legally enforced.Conclusion:The Supreme Court allowed the appeal, set aside the judgment and order of the Division Bench of the Calcutta High Court dated 4.8.2000, and restored the order of the learned Single Judge dismissing the writ petition. The appellants were entitled to their costs in the Supreme Court as well as in the High Court.