Supreme Court overturns High Court decision in contractual dispute emphasizing civil courts for factual disputes

The Supreme Court set aside the High Court's decision in a contractual dispute over a terminated road improvement contract. The Court emphasized that the High Court should not have entertained the writ petition involving disputed facts and should have avoided appointing a Commission for fact-finding. It reiterated that contractual disputes with disputed facts should be resolved in civil courts, not through writ jurisdiction. The Supreme Court highlighted that the appropriate legal forum for such disputes is where evidence can be properly examined, and exceptions for writ jurisdiction exist only in specific circumstances. No costs were imposed in this case.

---

---

Issues Involved:
1. Termination of Contract
2. Jurisdiction of High Court under Article 226
3. Appointment of Commission by the Appellate Bench
4. Disputed Questions of Fact in Writ Jurisdiction
5. Appropriate Legal Forum for Contractual Disputes

Detailed Analysis:

1. Termination of Contract:
The respondent was awarded a contract for road improvements, which was to be completed by 26.12.2011. Despite multiple extensions, the contractor failed to complete the work. Consequently, the contract was terminated, and the security deposit was forfeited by the Public Works Department (PWD). The termination was challenged in W.P.(C) No. 22541 of 2013, where the learned Single Judge directed the measurement of the completed work before finalizing any tender for the remaining work.

2. Jurisdiction of High Court under Article 226:
The Appellate Bench of the High Court reversed the Single Judge's decision, quashing the termination order based on the Commission's report, which indicated that the contractor had completed 72.24% of the revised estimate. The Supreme Court questioned whether the High Court should have exercised its writ jurisdiction under Article 226 in a contractual matter, emphasizing that such jurisdiction should not be extended to contractual disputes involving disputed questions of fact.

3. Appointment of Commission by the Appellate Bench:
The Appellate Bench appointed two Advocates as joint commissioners to inspect the site and submit a report. The Commission, assisted by a retired Assistant Executive Engineer, reported that 72.24% of the revised estimate was completed. The Supreme Court criticized this approach, stating that a writ jurisdiction should not be extended to conduct a roving enquiry through a Commission, especially without granting the State an opportunity to file objections.

4. Disputed Questions of Fact in Writ Jurisdiction:
The Supreme Court reiterated that writ petitions under Article 226 are not appropriate for adjudicating disputes involving breach of contract and disputed questions of fact. Citing precedents like State of Bihar v. Jain Plastics and Chemicals Ltd., the Court emphasized that such disputes should be resolved in a civil suit where evidence can be properly examined.

5. Appropriate Legal Forum for Contractual Disputes:
The Court highlighted that contractual disputes should be resolved by the appropriate legal forum, not through writ jurisdiction. It referenced cases like National Highways Authority of India v. Ganga Enterprises, which held that disputes relating to contracts are not suitable for writ petitions. The Court also discussed exceptions where writ jurisdiction might be invoked, such as in cases involving clear documentary evidence or interpretation of contract clauses, as seen in ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd.

Conclusion:
The Supreme Court allowed the appeal, setting aside the Appellate Bench's judgment. The Court emphasized that the High Court should not have entertained the writ petition in a contractual dispute involving disputed facts and should have refrained from appointing a Commission for fact-finding. The appropriate forum for such disputes is a civil court, where evidence can be thoroughly examined. The Court refrained from imposing costs, considering the circumstances of the case.

---