TMI Blog1977 (3) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... fter, cancellation of the lease itself was illegal for various reasons. Primarily, the case of the petitioners is that of a breach of contract for which the State would be liable ordinarily to pay damages if it had broken it. If the petitioners could establish some right, either contractual or equitable, to continue in possession, the State could be prevented, by appropriate proceedings, from ousting the petitioners from the forest land from which the petitioners have been gathering sal-seeds. The petitioners had also set up mala fides on the part of the Conservator of Forests, in enhancing the royalty unreasonably and then cancelling the lease, allegedly acting under the influence of friends and associates of the Forest Minister of Bihar. The relevant clause relating to revision of royalty in the written contract reads as follows :- The rate of royalty will be revised every three years' cycle in consultation with the lessee and the decision will be binding on the lessee . Apparently, there is no restriction, under the terms of the contract, upon the amount by which the royalty could be increased by a revision after a three years' cycle under this clause. The less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n it by Part III of the Constitution. The only article, however, in Part III of the Constitution relied upon by Dr. Singhvi is Article 14 which says: 14. The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India . It can be and has been urged on behalf of the State that Governmental authorities when acting in the contractual field, could not be controlled by Article 14 of the Constitution at all. When the State had entered into contracts with citizens who carry on their trade and pay the royalties. In accordance with the agreements reached between the State and citizens, it does not exercise any special governmental or statutory powers. In such cases, the State as well as the citizen with whom it contracts are both equally subjected to the law of contract. It has been urged on behalf of the respondent State that there has been nO breach of contract in the cases before us. The State is, according to the learned Solicitor General, appearing for the State of Bihar, not claiming to be above the law of contract governing all parties which subject themselves to the law of contract. The dispute whether there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als Ltd. v. State of West Bengal Anr.,( [1975] 2 S.C.R. 674 at 677.) on which learned counsel for the appellants sought to rely strongly. It was held there (at p. 677) :- Under Article 298 of the Constitution the Executive power of the Union and the State shall extend to the carrying on of any trade and to the acquisition, holding and disposal of the property and the making of contracts for any purpose. The State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part HI of the Constitution. Article 14 speaks. of equality before the law and equal protection of the laws. Equality of opportunity should apply to matters of public contracts. The State has the right to trade. The State has therefore the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of black-listing has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is. unable to enter into advantageous relations with the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 agreement 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 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amus, 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 officers 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 contract 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. Learned counsel for the appellants cited certain authorities in an attempt to support his submission that the State and its Officers are clothed with special Constitutional obligations, including those under Article 14 of the Constitution, in all their dealings with the public even when a contract is there to regulate such dealings. The authorities cited were: D.F. Sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commr. Ors.,( [1975] 3 S.C.R. 254 at 265) a Constitution Bench of this Court observed (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 contractual obligations . Learned Solicitor General, appearing for the State, contended that there could be no aspect of Article 14 of the Constitution involved in a case where no comparison of the facts and circumstances of a particular petitioner's case with those of other persons said to be similarly situated is involved. In such a case, he submitted, there was no possibility of inferring a discrimination. In reply, learned counsel for the appellants sought to direct our attention towards some allegations showing that there was discrimination between appellants and other parties governed by similar contracts in other areas. We doubt very much whether the doctrine of discrimination can be at all availed of against the State's section purporting to be taken solely within the contractual field when n6 aspect of any statutory or ConStitutional obligation appears either from incontrovertible facts or applicable legal provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of enforcement of Article 14 of the Constitution 'was involved. We think that to accede to the prayer on behalf of the appellants to. adjourn the hearing of these cases until after the Emergency is lifted and. yet to continue the stay orders is to permit a circumvention of the Constitutional mandate contained in Article 359 and to countenance a gross abuse of the processes of the Court. A rather desparate argument which has been addressed to us on behalf of the appellants is that they were entitled to an opportunity to. show cause against the cancellation of the leases. It was urged, on the strength of A.K. Kraipak Ors. etc. v. Union of India Ors.,( [1970] 1 S.C.R. 457.) that the distinction made between administrative and quasi-judicial action is thin and a vanishing one. This argument appears to. us to be wholly irrelevant inasmuch as a question of the distinction between an administrative and quasi-judicial decision can only arise in the exercise of powers under statutory provisions. Rules of natural justice are attached to the performance of certain functions regulated by statutes or rules made thereunder involving decisions affecting rights of parties. When a contr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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