2009(1) ALL MR (JOURNAL) 11
(MADHYA PRADESH HIGH COURT)

AJIT SINGH, J.

M. P. Powar Trading Co. Ltd.Vs.M/S. Lanco Amarkantak Powar Pvt. Ltd. & Ors.

W. P. No.4103 of 2008

16th June, 2008

Petitioner Counsel: M. L. JAISWAL,K. K. GAUTAM, R. N. SINGH,A. J. PAWAR
Respondent Counsel: Dr. A. M. SINGHVI,L. VISHWANATHAN, AMIT BHANDARI, MARK D'SOUZA (for No.1) V. K. TANKHA,BRIAN DA SILVA,AMIT KAPOOR, APOORVA MISHRA , VRUSHAL BHIDE

Constitution of India, Art.226 - Writ petition - Against a private company - Private company is also amenable to writ jurisdiction and mandamus can be directed to it if it is discharging public functions. (Para 7)

Cases Cited:
State of A.P. Vs. NTPC Limited, AIR 2002 SC 1895 [Para PARA6]
M. C. Chacko Vs. State Bank of Travancore, AIR 1970 SC 504 [Para PARA6]
Binny Ltd. Vs. V. Sadasivan, (2005)6 SCC 657 [Para PARA8]


JUDGMENT

-Heard the learned respective counsel for the parties on the preliminary objection raised by respondent No.1 regarding the maintainability of writ petition as well as on I. A. No.3511/2008 which is an application for vacating of interim ex parte stay order dated 31-3-2008.

2. Briefly stated the facts giving rise to this petition are that respondent No.1 is an electricity generating limited liability company incorporated under the Companies Act. It has set up a coal based thermal power station at village Pathadi, District Korba, Chhattisgarh, comprising of one generating unit which has an installed capacity of 300 MW. Respondent No.1 is, however, yet to start the generation of electricity. Respondent No.2 is also a company incorporated under the Companies Act and has been established with an objective to carry out the business of purchase and sale of all forms of electric power to the State Electricity Boards and other organizations. Madhya Pradesh State Electricity Board (in short, "the Board") is a Public Sector Undertaking and distributes electricity to the general public in the State of Madhya Pradesh which is facing acute shortage of power as a result of which the Board is constrained to purchase short term power on higher rates to avoid inconvenience to the public. The petitioner is a body constituted under the provisions of the Companies Act vide notification dated 3-6-2006 issued by the State Government of Madhya Pradesh. The State Government vide gazette notification dated 3-6-2006, Annexure-P1, has also made rules for carrying out the obligations of the Board relating to bulk purchase and sale of electricity. The petitioner is, therefore, an agent of the Board for carrying out these obligations.

3. On 11-5-2005 respondent No.2 entered into a Power,Purchase Agreement (in short, "PPA") vide Annexure P2 with respondent No.1 for the purchase of entire 300 MW power generated from the latter's above mentioned generating unit. It is not in dispute that by this agreement, respondent No.2 is at liberty to enter into a Power Sale Agreement (in short, "PSA") with one or more purchasers for sale of such power and in the agreement the Board has been identified as the sole purchaser. Thus, on 30-5-2005 respondent No.2 entered into PSA vide Annexure P3 with the Board (subsequently entrusted to petitioner) for the sale of whole 300 MW of power for 25 years. On 26-11-2005, as required, the Board filed a petition before the Madhya Pradesh Electricity Regulatory Commission (in short, "MPERC") for the approval of its PSA with respondent No.2 for sale of power from the generating unit of respondent No.1. The MPERC vide order dated 7-3-2005 issued provisional approval to the PSA subject to fulfilment of certain conditions which included filing of a petition by respondent Nos.1 and 2 before it for the approval of tariff. Respondent No.1, dissatisfied with the provisional approval and the conditions imposed by MPERC, issued the communication dated 14-3-2008, Annexure P15, terminating PPA, Annexure P2, with immediate effect on the ground that respondent No.2 did not fulfil the condition precedent as per its Clause 3.1 even after the lapse of considerable period of PPA. Aggrieved, the petitioner, claiming itself to be the sole beneficiary of PPA, has filed the present petition under Art. 226 of the Constitution essentially praying for quashing of the communication dated 14-3-2008, Annexure P15.

4. A Single Judge Bench of this Court vide order dated 31-3-2008 issued notices of the writ petition to respondents and also restrained them from giving effect to the impugned communication dated 14-3-2008, Annexure P15, with a further direction to maintain status quo with regard to the matter until further orders.

5. Respondent No.1, in its return, has taken a preliminary objection regarding the maintainability of writ petition on the ground that it being a limited liability company and not "State" is not amenable to the writ jurisdiction under Art. 226 of the Constitution. According to respondent No.1 the relief sought relates to PPA entered into by it with respondent No.2 which is also a limited liability company and not "State" and that no legal action can lie to enforce rights or obligations arising out of a contract to which the petitioner is not privy. The other two objections raised by respondent No.1 are that as per Article 14.1 of the PPA only the Courts of Delhi have the exclusive jurisdiction in all matters arising out of or in connection with the PPA and the parties were to resolve the dispute by referring the same to arbitration under Article 14.3.

6. Petitioner is admittedly not a party to the PPA. The object of the PPA was apparently to supply electricity generated by respondent No.1 through respondent No.2 to the Board which is a Public Sector Undertaking and distributes the electricity to the general public in the State of Madhya Pradesh. The Board is, thus, the sole beneficiary of the PPA with the above mentioned object. This is clearly brought out from the fact that in Clause 16.13 of the PPA, name and address of the Board is mentioned as purchaser to whom the electricity generated is to be sold. Electricity is "goods" as defined in Art.366(12) of the Constitution and is moveable property, although it cannot be stored (See State of A.P. Vs. NTPC Limited, AIR 2002 SC 1895 pp. 1906, 1907). The right of respondent No.2 to purchase the entire electricity generated by respondent No.1 is a right in property. The stipulation in the contract between respondent Nos.1 and 2 that the electricity generated is ultimately to be sold to the Board makes it a beneficiary of this property. The entire arrangement contemplated by the contract creates a trust of which respondent No.2 is the trustee and the Board is cestui que trust. Reference in this context may be made to the following definition of trust in Halsbury's Laws of England and reproduced in Advanced Law Lexicon of P. Ramanatha Aiyar 34d Edition Book 4 Page 4777 "When a person has property or rights which he holds or is bound to exercise for or on behalf of another or others or for the accomplishment of some particular purpose or particular purposes, he is said to hold the property or rights in trust for that other or those others or for the purpose or those purposes and he is called a trustee". The Board could have, thus, enforced the contract by instituting a suit (See M. C. Chacko Vs. The State Bank of Travancore, AIR 1970 SC 504 Para 9). This also confers upon the petitioner the requisite standing as an agent of the Board to enforce the contract under Article 226 of the Constitution as its non-performance by respondent No.1 will seriously affect public interest. Further, the objection that there is no privity of contract between the petitioner and respondent No.1 loses much of its significance as respondent No.2 fully supports the case of petitioner and is willing to be transposed as petitioner.

7. As regards the point that respondent No.1 is a private company and not a State and so is not amenable to writ jurisdiction, the law on the point is that a private company is also amenable to writ jurisdiction and a writ of mandamus can be directed to it when it is discharging public function. Having regard to the object of the agreement between respondent Nos.1 and 2 for supplying the electricity to the Board for distribution to the public, it can be said that performance of the agreement by respondent Nos.1 and 2 is related to the discharge of public function. Any non-performance of its function by respondent No.1, if it is arbitrary without any reasonable cause can be corrected under Article 226 of the Constitution of India by issuance of writ of mandamus.

8. The learned counsel for respondent No.1 in support of his submission that no writ petition can be issued against a private company in a contractual matter relied upon the decision of Supreme Court rendered in Binny Ltd. and another Vs. V. Sadasivan and others, (2005)6 SCC 657. In this case itself, Balakrishnan, J., as he then was, has made the following observations (Para 29) :

"The scope of mandamus is determined by the nature of the duty to be enforced, rather than the identity of the authority against whom it is sought. If the private body is discharging a public function and the denial of any right is in connection with the public duty imposed on such body, the public law remedy can be enforced. The duty cast on the public body may be either statutory or otherwise and the source of such power is immaterial, but, nevertheless, there must be the public law element in such action. Sometimes, it is difficult to distinguish between public law and private law remedies."

These observations underlined by me support my view that even a private body lika a company is amenable to writ jurisdiction if it is discharging public functions for carrying out public duty and it is immaterial that the duty cast on respondent Nos.1 and 2 is not under any statute but under a contract.

9. Lastly, since the petitioner is not a party to the PPA between respondent Nos.1 and 2 it is not bound by the terms of the agreement which relate to arbitration and give exclusive jurisdiction to the Courts in Delhi. These terms may have applied had the litigation been exclusively between respondent No.1 and respondent No.2. But that is not the position in the present case.

10. For these reasons, the preliminary objection raised by respondent No.1 regarding the maintainability of writ petition as well as the application for vacating the interim stay order dated 31-3-2008 are rejected. The case be now listed for final hearing on any date suitable to the parties.

Ordered accordingly.