Report No. 145

5.21. Role of civil court.-

It must also be pointed out that even if writ jurisdiction is rendered inapplicable against public sector undertakings as contemplated by the proposed amendment, there can still remain some scope for judicial interference, if the issue raised by the contractor or employee is such that the same can be litigated in an ordinary court. No doubt, the grounds of judicial remedy in a writ case and in an ordinary civil suit may not necessarily be identical. But we are mentioning this aspect in order to emphasise that the possibility of stay orders or injunctions issued by ordinary civil courts would still be there.

A temporary injunction can be granted under Order 39, rule 1 of the Code of Civil Procedure, 1908 if an injury is apprehended by the applicant. In this context, "injury" is generally understood as meaning the violation of a legal right. If it is the plea of the contractor that the action taken or proposed to be taken by the undertaking is in breach of contract, obviously there is a possibility of an injunction being issued, provided the case is otherwise fit for injunction.

We are referring to this aspect, because we find from the material on the file, that there are several instances of writ petitions where the dispute is about alleged breach of contractual stipulations by a public sector undertaking. Sometimes, the dispute is about increasing the price1. Occasionally, the contractor petitions for delivery of specified commodities as per contract, where the commodity is under the control of a public sector undertaking2.

At times, the dispute is about the interpretation of a rate running contract3. In a few other cases, the encasement of bank guarantee was at issue.4 We need not multiply examples; but we must point out that such matters will continue to be the subject-matter of litigation, even after public sector undertakings are removed from the ambit of Article 12. Their prima facie justiciability depends on a variety of arguments, whose source lies in legal principles derived from the ordinary law. The relevant principles are not derived only from the Constitution.

It is also worth mentioning that in several judicial decisions, it has been pointed out that the word "authority" in Article 226 of the Constitution may have a wider ambit than the agencies mentioned in Article 12. Removal of public sector undertakings from the scope of Article 12 may not, therefore, totally remove them from writ jurisdiction.

Before we conclude, we consider it relevant to refer to the Law Commission's 126th Report which emphasised that the Government and public sector undertakings must have their own litigation policy and strategy and they must be devised with a view to encouraging avoidance of litigation and settlement of disputes by alternative methods. Litigation is an unproductive investment both in time, and money.

Public sector undertaking and the Government have to conserve their resources and determine priorities of expenditure by a judicious approach so that unproductive litigation does not eat away a large chunk of the scarce resources, smoothening, socially beneficial schemes for want of financial assistance. These observations were made as the Law Commission observed that there was a movement by the public sector undertakings to be freed from the yoke of the Constitution. The Law Commission further observed:-

"In fact, there is a recent movement by public sector undertakings to be freed from the yoke of the Constitution. At any rate, the object purpose and underlying philosophy towards setting up of public sector undertakings must mould its approach towards its employees, the consumers of its products and even other public sector undertakings. At any rate, it cannot afford to develop a litigious culture exhibited by private sector employers.

And yet, numerous cases can be quoted where the public sector undertakings not only brought entirely frivolous disputes right up to the Supreme Court, but delayed the resolution of disputes by raising absolutely unsustainable, frivolous, preliminary objections. [(1983) 4 SCC 214; S.K. Verma v. Mahesh, Chandra v. Goa Sampling Employees Associations. General Superintendence Co. of India, (1985) 2 SC 353; D.P. Maheshwari v. Delhi Administration, (1983) 4 SCC 293; Workmen Employed by Hindustan Lever Ltd., v. Hindustan Lever Ltd., (1984) 4 SCC 392]."

1. Letter dated 13th February, 1989 and Letter dated 7th February, 1989.

2. Letter dated 6th February, 1989.

3. Letter dated 9th March, 1989 and enclosures thereto.

4. Letter dated 13th February, 1989.