Saturday, 10 April 2021

Supreme Court: Tests to determine when writ petition is maintainable or not if there is a breach of contractual obligations by state authorities

 In the cases before us the contracts do not contain any statutory terms or obligations and no statutory power of obligation which could attract the application of Article 14 of the Constitution is involved here. Even in cases where the question is of choice or consideration of compet- ing claims before an entry into the field of contract facts have to be investigated and found before the question ,of a violation of Article 14 could arise. If those facts are disputed and require assessment of evidence the correctness of which can ,only be tested satisfactorily by taking de- tailed evidence, involving examination and cross-examina- tion of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article '226 of the Constitution. Such proceedings are summary proceedings reserved for extraordinary cases where the exceptional and what are described as, perhaps not quite accurately, "pre- rogative" powers of the Court are invoked. We are certain that the cases before us are not such in which powers under Article 226 of the Constitution could 'be invoked. The Patna High Court had, very rightly divided the types of cases 'in which breaches of alleged obligation by the State units agents can be set up into three types. These were stated as follows :--

"(i) Where a petitioner makes a grievance of breach of promise on the part of the State in cases where an assurance or promise made by the State he has acted to his prejudice and predicament, but the agree- ment is short of a contract within the meaning of article 299 of the Constitution;
(ii) Where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under certain Act or Rules framed thereunder and the petitioner alleges a breach on the pan of State; and
(iii) Where the contract entered into between the State, and the person aggrieved is non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract, and the petitioner complains about breach of such contract by the State."
It rightly held that the cases such as Union of India v.

M/s. AngloAfghan Agencies,(1) and Century Spinning & Manu- facturing Co. Ltd. v. Ulhasnagar Municipal Council(2); and Robertson v. Minister of Pensions,(3) belong to the first category where it could be held that public bodies or the State are as much bound as private individual are to carry out obligations incurred by them because parties seeking to bind the authorities have altered their position to their disadvantage or have acted to their detriment on the strength of the representations made by these authorities. The High Court thought that in such cases the obligation could sometimes be appropriately enforced on a Writ Petition even though the obligation was equitable only. We do not propose to express an opinion here on the question whether such an obligation could be enforced in proceedings under Article 226 of the Constitution now. It. is enough to observe that the cases before us do not belong to this category.

The Patna High Court also distinguished cases which belong to the second category, such as K.N. Guruswami v. The State of Mysore;(4) ' D.F. South Kheri v. Ram Sanehi Singh;(5) and M/s. Shree Krishna Gyanoday Sugar Ltd. v. The State of Bihar,(6) where the breach complained of was of a statutory obligation. It correctly pointed out that the cases before us do not belong to this class either. It then, very rightly, held that the cases now before us should be placed in the third category where questions of pure alleged breaches of contract are involved. It held, upon the strength of Umakant Saran v. The State of Bihar;(7) and Lekhrai Sathram Das v.N.M. Shah;(8) and B.K. Sinha v. State of Bihar(9) that no writ order can issue under Article 226 of the Constitution in such cases "to compel the authorities to remedy are a breach of contract pure and simple".


Learned counsel for the appellants has, however, relied upon a passage from Lekhraj Sathram Das's case (supra) where this Court observed (at p. 231);

" .... until and unless in the breach is involved violation of certain legal and public duties or violation of statutory duties to the remedy of which the petitioner is entitled by issuance of a writ of mandamus, mere breach of contract cannot be remedied by the Court in exercise of its powers under Article 226 of the Constitution".

Learned counsel contends that in the cases before us breaches of public duty are involved. The submission made before us is that, whenever a State or its agents or offi- cers deal with the citizen, either when making a transaction or, after making it, acting in exercise of powers under the terms of contract between the parties, there is a dealing between the State and the citizen which involves performance of "certain legal and public duties." If we were to accept this very wide proposition every case of a breach of con- tract by the State or its agents or its officers would call for interference under Article 226 of the Constitution. We do. not consider this to be a sound proposition at all. 


 None of these cases lays down that, when the State or the officers purport to operate within the contractual field and the only grievance of the citizen could be that the contract between the parties is broken by the action complained of, the appropriate remedy is by way of a petition under Article 226 of the Constitu- tion and not an ordinary suit. There is a formidable array of authority against any such a proposition. In Lekhraj Sathramdas Lalwani v. M.M. Shah, Deputy Custodian-cum- Managing Officer, Bombay & Ors., (supra) this Court said (at p. 337);

"In our opinion, any duty or obligation falling upon a public servant out of a con- tract entered into by him as such public servant cannot be enforced by the machinery of a writ under Art. 226 of the Constitution".

In Banchhanidhi Rath v. The State of Orissa & Ors(1) this Court declared (at p. 845):

"If a right is claimed in terms of a contract such a right cannot be enforced in a writ petition."

In Har Shankar & Ors. etc. etc. v. The Dy. Excise & Taxation Commr. & Ors.,(2) a Constitution Bench of this Court ob- served (at p. 265): "The appellant have displayed ingenuity in their search for invalidating circumstances but a writ petition is not an appropriate remedy for impeaching con- tractual obligations".

Supreme Court of India

Radhakrishna Agarwal & Ors vs State Of Bihar & Ors on 17 March, 1977
Equivalent citations: 1977 AIR 1496, 1977 SCR (3) 249
BENCH:
BEG, M. HAMEEDULLAH (CJ)
GUPTA, A.C.
KAILASAM, P.S.
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