HCs should not hear writ petitions in contractual disputes, says apex court

The Supreme Court has advised High Courts to desist from appointing a committee to examine facts in cases of breach of contracts, saying such action is impermissible in law and does not subserve any public interest.

A bench of Justices Dipak Misra and Prafulla C Pant set aside a Kerala HC order, which had cancelled termination of contract relating to building road in Kannur District after appointing a Commission to examine the facts.

“A writ court should ordinarily not entertain a writ petition, if there is a breach of contract involving disputed questions of fact,” the bench said, adding, “the procedure adopted by the High Court, if we permit ourselves to say so, is quite unknown to exercise of powers under Article 226 in a contractual matter.”
 
In the case, the bench noted the HC appointed a Commission to collect the evidence, accepted its report without calling for objections and quashed the order of termination of contract.

Allowing an appeal filed by the Kerala government, the court said that this kind of orders in a contractual matter, is ill-conceived as they not only convert the controversy to a “disturbing labyrinth, but encourage frivolous litigation”.

“We can well appreciate a Committee being appointed in a Public Interest Litigation to assist the court or to find out certain facts. Such an exercise is meant for public good and in public interest,” the court said.

“For example, when an issue arises whether in a particular state there are toilets for school children and there is an assertion by the state that there are good toilets, definitely the court can appoint a Committee to verify the same. It is because the lis is not adversarial in nature. The same principle cannot be taken recourse to in respect of a contractual controversy,” the bench added.