Alternate Remedy Does not Bar HC's Jurisdiction

A 3-judge bench of the Supreme Court, consisting of Justices Dr. D.Y.Chandrachud, Vikram Nath and B.V. Nagrathna, has ruled in the judgment of the case –M/s Magadh Sugar & Energy Ltd. v. the State of Bihar &Others, delivered on September 24, 2021, that the existence of an alternate remedy does not by itself bar the High Court from exercising its jurisdiction in certain contingencies.

The SC has pointed out that the Court has crystallized this principle in the judgments of the cases- Whirlpool Corporation v. Registrar of Trade Marks, Mumbai-(1998) 8 SCC 1 and Harbanslal Sahni v. Indian Oil Corporation Ltd.-(2003) 2 SCC 107.Recently, in the judgment of the case –Radha Krishen Industries v. State of Himachal Pradesh & Others- 2021 SCC Online SC 334, a two-judge bench of the SC ( with Justice Chandrachud on it) has summarized the principles governing the exercise of writ jurisdiction by the HC in the presence of an alternate remedy. The SC has observed :

“28. The principles of law, which emerge are that: (i) The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well; (ii) The HC has discretion not to entertain a writ petition. One of the restrictions placed on the power of the HC is where an effective alternate remedy is available to the aggrieved person; (iii) Exceptions to the rule of alternate remedy arise where (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution;(b) there has been a violation of principles of natural justice; (c)the order or proceedings are wholly without jurisdiction; or (d)the vires of a legislation is challenged; (iv)An alternate remedy by itself does not divest the HC of its powers in an appropriate case though ordinarily , a writ petition should not be entertained when an efficacious alternate remedy is provided by law;

“(v) when a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the statutory remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion; and (vi) In cases, where there are disputed questions of fact, the HC may decide to decline jurisdiction in a writ petition. However, if the HC is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with.”

The principle of alternate remedies and its exceptions was also reiterated recently in the decision of Asst Commissioner of State Tax v M/s commercial Steel Ltd.- Civil Appeal No. 5121 of 2021. In the judgment of State of HP v. Gujarat Ambuja Cement Ltd.-(2005) 6 SCC 499, the SC has held that a writ petition is maintainable before the HC if the taxing authorities have acted beyond the scope of their jurisdiction.

In the judgment of the case- Executive Engineer v. Seetaram Rice Mil- (2012) 2 SCC 108, the SC has observed : “ 82. It is argued and to some extent correctly that the HC should not decline to exercise its jurisdiction merely for the reason that there is a statutory alternate remedy available even when the case falls in the above stated class of cases.

“It is settled principle that the court/tribunal will not exercise jurisdiction in futility. The law will not itself attempt to do an act which would be vain, lex nil frustra facit, not to enforce one which would be frivolous- the law will not force anyone to do a thing vain and fruitless. In other words, if exercise of jurisdiction by the tribunal ex facie appears to be an exercise of jurisdiction in futility for any of the stated reasons, then it will be permissible for the HC to interfere in exercise of its jurisdiction. The issue is no longer res integra and has been settled by a catena of judgments of the SC.

The appellant is admittedly a sugar Mill producing electricity from bagasse (a by-product of sugar production).The electricity that is produced is used for running the Mill and the excess is sold to Bihar State Electricity Board (BSEB).The writ petition filed by the appellant was dismissed by the impugned judgment. This petition along with the other one filed by the NTPC, before the Patna HC, challenged the power of the State Govt. to levy tax on sale of electricity to Electricity Boards.

The test which requires to be applied for the determination of a question of law is whether the rights of the parties before the court can be determined without reference to the factual scenario. In this case, the HC was entrusted with the determination of the meaning of the phrases used in section 3 of the Act to determine if the supply of electricity by the appellant would fall within the ambit .Unlike a dispute on the execution of a promissory note or a plea of adverse possession, there is no adjudication on facts required here. There is also no dispute about the nature of the transaction involved.

The issues raised by the appellant are questions of law which require, upon a comprehensive reading of the Bihar Electricity Act, a determination of whether tax can be levied on the supply of electricity by a power generator (which also manufactures sugar) to a distributor, and whether the first respondent- (State of Bihar) has the legislative competence to levy duty on the sale of electricity to an intermediary distributor in view of the decision of the SC in the case- State of AP v. National Thermal Power Corporation Ltd. –(2002) 5 SCC 203.The questions raised by the appellant can be adjudicated without delving into any factual dispute. Thus, the present case is amenable to the writ jurisdiction of the HC.

The SC has stated that the HC erroneously declined to entertain the writ petition and it would be appropriate to restore the proceedings back to the HC for a fresh disposal. The SC has left the case open for fresh evaluation by the HC. The SC has allowed the appeal, set aside the HC’s judgment of September 18, 2017 and restored the case to the file of the Patna High Court.