9911796707
TMI Blog1997 (10) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... pply to State Electricity Boards and other power utilisers in the country. For the manufacture of such conductors and cables, Aluminium is the basic product. Aluminium being an essential commodity, its production, distribution and supply were governed by the provisions of the Essential Commodities Act, 1955, and the orders made thereunder. Respondent No. 1 Minerals and Metals Trading Corporation (for short M.M.T.C.) is a Government of India undertaking. It was vested with the exclusive powers to import not only Aluminium but also other metals like Manganese, Black Sheets, base metals like copper, etc., 4. The Government of India enunciated a formal distribution policy for Aluminium metal from 1979-80, and the Government of India appointed the first respondent as the sole and exclusive canalising agents for the import of Aluminium. The first respondent assumed a statutory obligation, and were cast with statutory liability, accountability, to ensure fair, formal and rational distribution of Aluminium to the Conductors and Cable manufacturers. First respondent allotted to the petitioner company 1803 M.T. of Aluminium for the first half, and 2137 M.T. for the second half, totalling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was informed that the delivery order was taken back for unexplained reasons. The authorised transporters of the petitioner approached the first respondent number of times, for collection, but they were not allowed to load the materials, and the reason given by the first respondent orally was stock taking . In view of the difficulties the petitioner sent two telegrams, one on 23.3.1981 and the other on 27.3.1981, requesting supply of Aluminium as agreed. He did not receive any reply explaining for what reasons the supply was withheld. 9. In the meanwhile there was report in the newspapers about the increase in the price of Aluminium, which was confirmed by the issue of Gazatte Notification by the Government of India on 27.3.1981 increasing the sale price of indigenous and imported Aluminium. The first respondent was having in its godown, metal imported prior to 20th March, 1981. Even the metal imported prior to November, 1980 was lying with the first respondent, for which the petitioner had made necessary financial arrangement. The first respondent went to the extent of issuing a trade Notice in Press and dailies on 28.3.1981 demanding the allottees, who had already made finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al and public duty to deliver the goods allotted to the petitioner. It was asserted that the first respondent was entitled to claim the increase in price ruling on the date of delivery, and the petitioner had taken delivery of the goods by virtue of the orders passed in the W.M.P. after giving a bank guarantee for the difference in the price as directed by this Court. The petitioner furnished L.C. No. 5/81 dated 6.3.1981 from Punjab National Bank which was not in accordance with the prescribed proforma. They got it amended on 23.3.1981 and furnished the same to the first respondent on 26.3.1981 belatedly and lifted the material under D.Nos.4648 and 4649, both date, 14.5.1981. This letter of credit covered the quantity of 375 M.T. Hence the petitioner cannot claim any relief in respect of 375 M.T. covered by L.C. No. 5/81. 13. It was the further stand of the first respondent that the principles of equitable estoppel and promissory estoppel would not apply to the facts of the case; it was not correct to contend that the increase in price would not apply to the delivery orders already issued. The fixation of price was wholly an administrative act in which the petitioners were not e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate enter into a contract, they are governed by the terms of the contract, and they are no longer governed by the Constitutional provisions, and these cases were not the cases of awarding contracts but they were for the enforcement of the terms of the contract. Referring to few decisions of the Apex Court and Division Bench decisions of this Court mentioned in the order of reference, the Division Bench felt that enforcement of the contract is not a matter which has to be decided under Article 226 of the Constitution of India, and that the parties aggrieved have to approach the Civil Court for appropriate relief. The Division Bench also felt that every now and then similar cases arise for consideration. As such the Division Bench thought it appropriate to refer these appeals to a larger Bench by its order dated 10.3.1997. Thus these writ appeals are posted before us for hearing and disposal. 18. The learned counsel for the parties in their arguments reiterated the submissions made by them before the learned single judge in the writ petitions. The learned senior counsel for the respondent No. 1 M.M.T.C. added that the learned single Judge committed an error in holding that the wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements made in paragraphs 28, 30, 31 39 and 43 of the affidavit are not controverted by the first respondent except denying that the delivery was withheld purposely expecting increase in the price. 23. In paragraph 4 of the common counter affidavit filed by first respondent, it is averred:- The material allegations contained in the affidavits are that the Petitioner's Representatives called at the Godown of the First Respondent Corporation on 24.3.1981 and 25.3.1981, they were not given delivery of the material and that subsequently they were told that the Head Office had instructed them to stop delivery of aluminium. On the 24th March, 1981, it would not have been possible to service all the writ petitions. On 27th March 1981, under directions of the Union Government of India, the price of E.C. Grade wire rods were enhanced from ₹ 16,349 to ₹ 19,476 and under the provisions of the Sale Note/Delivery Order, the ruling price as on the date of taking delivery of the goods is applicable. It was in these circumstances that the petitioners were asked to make good the difference between the old price and the new price. It is denied that the First Respondent Corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us parties making similar claims, as can be seen from the common counter affidavit filed, which is found in page 27 of the typed set. The learned single Judge had allowed the claims of writ petitioners wherever letter of credits were opened by the petitioners within the time and delivery orders were given before 27.3.1981. In the common Judgment dated 28.2.1997 passed in Writ Appeal Nos.328, 329, 434, 504 and 505 of 1990, and also 260 of 1990, to which one of us (Shivraj Patil, J.) was a party, had occasion to deal with identical questions on almost identical facts of this case, arising out of six writ petitions mentioned in the above 10 cases. The Division Bench dismissed all those appeals confirming the order of the learned single Judge. 28. Having regard to the identical facts and similar questions arising for consideration in these writ appeals, we have no good or valid reason to differ with the discussion made and conclusions reached in the Judgment of the Division Bench dated 28.2.1997 made in W.A. Nos. 328, 329, 434, 504 and 505 of 1990. Paragraphs 16 to 19 of the said judgment read:- 16. It is not the case of the first respondent that the delivery order was given sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issuing of the delivery order, when the petitioner had fulfilled all its obligations and performed its part of the contract, the first respondent could not delay delivery or postpone delivery without any valid reason and then insist for increased price on the basis of the revised price. 19. The argument of the learned senior counsel for the first respondent was that the price revision was permissible and the price was revised on the recommendation of the statutory committee. Be that as it may, the question is whether increased price could be insisted from the petitioner postponing the delivery without any valid reason that too having given the delivery order on 17.3.1981. The petitioner could have taken delivery on any day within 15 days from 17.3.1981 as stated above. If only the delivery of the consignment was given to the petitioner on 21.3.1981, the question of applying revised price or demanding increased price as ruling on 27.3.1981 did not arise. Thus in our view, the learned single judge was right in allowing the writ petition. We do not find any good or valid ground so as to differ from the conclusions arrived at by the learned single judge. Hence this appeal is liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the controversy raised came within the realm of contract. For the first rime before the Division Bench in these writ appeals, this ground is raised. However, this being a question of law, and in view of the order of reference, we are considering the same. We also take note that even in the grounds of these writ appeals the respondent No. 1 has not stated that any disputed question of fact arises for consideration. 32. It is neither disputed nor it is the case of the first respondent that the first respondent Corporation is not a State or authority within the meaning of Article 12 of the Constitution. Even in the order of reference the Division Bench of this Court has stated that the respondent No. 1 is a State within the meaning of Article 12 of the Constitution. 32. The Division Bench, while referring these appeals to larger Bench, referred to the following decisions of the Apex Court, viz., (i) Radhakrishna Agarwal and Ors. v. State of Bihar and Ors., ; (ii) Premji Bhai Parmar and Ors. etc., v. Delhi Development Authority and Ors., ; (iii) Divisional Forest Officer v. Bishwanath Tea Co., Ltd., ; and (iv) Bareilly Development Authority and Anr. v. Ajay Pal Singh and O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdinary cases so as to invoke prerogative powers of the Court. In the same paragraph it is also stated that on facts of those cases they were not such in which powers under Article 226 of the Constitution could be invoked. 35. In Premji Bhai Parmar and Ors. etc., v. Delhi Development Authority and Ors., , the Apex Court followed 'Radhakrishnan's case, aforementioned, and on facts of that case, it was held that the petitioners did not make out a case to attract Article 14 of the Constitution. 36. In Divisional Forest Officer v. Bishwanath Tea Co., Ltd., , it is stated that ordinarily, where a breach of contract is complained of, a party may sue for specific performance of the contract if the contract is capable of being specifically enforced, or the party may sue for damages in civil court. A petition for specific performance of a contract or recovery of damages cannot be entertained under the extra ordinary jurisdiction of High Court. Paragraph 10 of the said Judgment reads:- In substance, this was a suit for refund of a royalty alleged to be unauthorisedly recovered and that could hardly be entertained in exercise of the writ jurisdiction of the High Court. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew for testing validity of the impugned circular on the anvil of Article 14, we are also clearly of the view that this power is available even without that element on the premise that after the initial appointment, the matter is purely contractual. Applicability of Article 14 to all executive actions of the State being settled and for the same reason its applicability at the threshold to the making of a contract in exercise of the executive power being beyond dispute, can it be said that the State can thereafter cast off its personality and exercise unbridled power unfettered by the requirements of Article 14 in the sphere of contractual matters and claim to be governed therein only by private law principles applicable to private individuals whose rights flow only from the terms of the contract without anything more? We have no hesitation in saying that the personality of the State, requiring regulation of its conduct in all spheres by requirements of Article 14, does not undergo such a radical change after the making of contract merely because some contractual rights accrue to the other party in addition. It is not as if the requirements of Article 14 and contractual obligations a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, contractual or otherwise, which is decisive of the nature of scrutiny permitted for examining the validity of its act. The requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act, even in contractual matters. There is a basic difference between the acts of the State which must invariably be in public interest and those of a private individual, engaged in similar activities, being primarily for personal gain, which may or may not pronote public interest. Viewed in this manner, in which we find no conceptual difficulty or anachronism, we find no reason why the requirement of Article 14 should not extend even in the sphere of contractual matters for regulating the conduct of the State activity. (Italic supplied). 28. Even assuming that it is necessary to import the concept of presence of some public element in a State action to attract Article 14 and permit judicial review, we have no hesitation in saying that the ultimate impact of all actions of the State or a public body being undoubtedly on public interest, the requisite public element for this purpose is prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondents. In view of this we need not dilate on the submission of Shri Ganguli that even in contractual matters public authorities have to act fairly; and if they fail to do so approach under Article 226 would always be permissible because that would amount to violation of Article 14 of the Constitution. In support of this submission, Shri Ganguli has mainly relied upon a two judges Bench decision of this Court in Kumari Shrilekha v. State of U.P., of which this aspect of the matter has been dealt with by stating that the requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act even in contractual matters (see paragraph 24). What has been stated in paragraph 28 is that it would be difficult and unrealistic to exclude the State action in contractual matters, after the contract has been made, from the purview of the judicial review to test its validity on the anvil of Article 14. The Bench thereafter referred to various earlier decisions of this Court on this point including Mahavir Auto Stores v. Indian Oil Corporation, and Dwarka Das Marifatia v. Board of Trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or oblique or irrelevant consideration. There was no commitment, it was suggested, to supply a fixed quantity regularly, made to the appellant firm at any stage. 12. It is well settled that every action of the State or an instrumentality of the State in exercise of its executive power, must be informed by reason. In appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32 of the Constitution. Reliance in this connection may be placed on the observations of this Court in . Radhakrishna Agarwal v. State of Bihar, . It appears to us, at the outset, that in the facts and circumstances of the case, the respondent company IOC is an organ of the State or an instrumentality of the State as contemplated under Article 12 of the Constitution. The State acts in its executive power under Article 298 of the Constitution in entering or not entering in contracts with individual parties. Article 14 of the Constitution would be applicable to those exercise of power. Therefore, the action of State organ under Article 14 can be checked. See Radhakrishna Agarwal v. State of Bihar, , but Article 14 of the Constitution cannot and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-discrimination in the type of the transactions and nature of the dealing as in the present case. 17. We are of the opinion that in all such cases whether public law or private law rights are involved, depends upon the facts and circumstances of the case. The dichotomy between rights and remedies cannot be obliterated by any straight jacket formula. It has to be examined in each particular case. Mr. Salve sought to urge that there are certain cases under Article 14 of arbitrary exercise of such power and not cases of exercise of a right arising either under a contract or under a Statute. We are of the opinion that would depend upon the factual matrix. 44. The decisions referred to in paragraphs 32 to 37 in this order, in our view, have not laid down that under no circumstances a writ petition can be entertained or the power of judicial review under Article 226 of the Constitution can be exercised for the enforcement of contractual obligations, in respect of contracts wherever the State, or Authority coming within the meaning of Article 12 of the Constitution is a party. Careful reading of those decisions shows that on the facts and circumstances of those case, such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... While reiterating that ordinarily writ petitions cannot be entertained under Article 226 ,of the constitution of India for enforcement of terms of contract, or to claim damages arising out of concluded contract for breach of contract, one of the parties being the State or Authority to such contract, we hold that the jurisdiction to exercise the power of judicial review under Article 226 of the Constitution is not totally curtailed or absolutely excluded in examining and testing the validity of State action, even in such matters in extra-ordinary cases as to whether the requirement of Article 14 of the Constitution were satisfied by the State/Authority, though ordinarily the courts may not entertain writ petitions, and decline to grant relief exercising powers under Article 226 of the Constitution for enforcement of terms of contract or to get remedy for a breach of contract on the basis of concluded contracts, one of the parties being State or authority to such contracts. This conclusion we have reached in the light of the aforementioned decisions and the Constitutional scheme, and in particular the provisions contained in Article 14 and 226 of the Constitution. 48. Normally for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing from the records of the appellant corporation, and the averments made in support of the writ petition not controverted by the first respondent. The clear finding of the learned single judge and the irresistible conclusions we have arrived at, on the facts and circumstances of the case, is that there was unreasonable and unjustified delay on the part of the first respondent in effecting delivery of consignment after issue of delivery order that too when after the writ petitioners had fulfilled all their obligations pursuant to the contract. In view of the discussion already made above, the first respondent could not delay deliver waiting for the increase of price and then demand increased price from the writ petitioners. This action of the first respondent was clearly arbitrary and unreasonable attracting Article 14 of the Constitution of India to support the case of the petitioners. This being the position, we have no hesitation to reject the contention of the learned senior counsel for the respondent that the writ petitions were not maintainable. 51. These writ appeals, based on identical set of facts and raising similar contentions as are raised in the aforementioned writ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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