TMI Blog2015 (5) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... contract in question was signed after the approval of Cabinet was obtained. In the said contract, there was no clause pertaining to Section 42 of the Act. In the two PSCs, no provision is made for making admissible the aforesaid allowances to the assessee. It is obvious that the Assessing Officer could not have granted these allowances/deductions to the assessee in the absence of such stipulations, a mandatory requirement, in the PSCs. The appellant is presumed to have knowledge of the legal provision, namely, in the absence of such a clause, special allowances under Section 42 would impermissible. Still it signed the contract without such a clause, with open eyes. No doubt, the appellant claimed these deductions in its income tax returns and it was even allowed these deductions by the Income Tax Authorities. Further, no doubt, on this premise, it shared the profits with the Government as well. However, this conduct of the appellant or even the respondents, was outside the scope of the contract and that by itself may not give any right to the appellant to claim a relief in the nature of Mandamus to direct the Government to incorporate such a clause in the contract, in the face of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been laid on the Table of each House of Parliament. 2) The Income Tax Authorities extended the benefit of granting deductions under the aforesaid provisions from the year 2001-02 (assessment years onwards) when the appellant commenced commercial production in the aforesaid two oil fields. However, while making assessment for the Assessment Year 2005-06, the Assessing Officer observed that there were no such provisions made in the Agreements which were signed between the Central Government and the appellant and in the absence of such stipulation in the agreement, the appellant was not entitled to the benefit of deductions under Section 42 of the Act. Realising that the Agreements did not contain such a provision, the appellant wrote to the MoPNG stating that though there was such an arrangement agreed to as per the understanding between the two parties, non-inclusion thereof was an inadvertent omission in the Contracts that were signed. The MoPNG wrote to Ministry of Finance (MoF) accepting the aforesaid omissions and requested the MoF to give clarification in this behalf. As no clarification came from the MoF, the Assessing Officer disallowed the claim for deduction under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial benefits and deductions in relation to taxes etc. that would be allowed to contractors/developers, as per the requirements of Section 42 of the Act. 5) The MoF by its Office Memorandum dated 18.06.1992, raised an issue that Section 293-A of the Act would not apply to contracts of the nature mentioned above, and that benefits under the special provisions of Section 42 of the Act would not be available to foreign companies, such as the appellant, which enter into such contracts with the Central Government. The MoPNG by its Office Memorandum, dated 22.06.1992 ( OM ) referred the issue to the Ministry of Law, Justice and Company Affairs specifically seeking its opinion on applicability of Section 42 and Section 293-A of the Act to the 1992 NIT and the MPSC. 6) The Ministry of Law gave its opinion dated 21.07.1992 to the effect that benefit of both Section 293A and Section 42 should be extended to foreign companies in order to make their participation in these oil fields viable. 7) The appellant (along with its erstwhile joint venture partner Larsen and Toubro Ltd., whose stake was also subsequently acquired by the appellant) submitted its bid dated 29.03.1993 in response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;s two PSCs are among these thirteen (13) PSCs referred to by the MoPNG in this Office Memorandum. The OM noted that it would not be equitable and fair if Section 42 deductions were denied in respect of these 13 PSCs. 11) Since the entire dispute pertains to deductions under Section 42 of the Act, at this stage we reproduce the said provisions hereunder: 42. Special provision for deductions in the case of business for prospecting, etc., for mineral oil.-[(1)] For the purpose of computing the profits or gains of any business consisting of the prospecting for or extraction or production of mineral oils in relation to which the Central Government has entered into an agreement with any person for the association or participation 90[of the Central Government or any person authorised by it in such business] (which agreement has been laid on the Table of each House of Parliament), there shall be made in lieu of, or in addition to, the allowances admissible under this Act, such allowances as are specified in the agreement in relation- (a) to expenditure by way of infructuous or abortive exploration expenses in respect of any area surrendered prior to the beginning of commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed for expenditure incurred remaining unallowed shall be arrived at by subtracting the proceeds of transfer (so far as they consist of capital sums) from the expenditure remaining unallowed. Explanation.-Where the business or interest in such business is transferred in a previous year in which such business carried on by the assessee is no longer in existence, the provisions of this clause shall apply as if the business is in existence in that previous year; (c) are not less than the amount of the expenditure incurred remaining unallowed, no deduction for such expenditure shall be allowed in respect of the previous year in which the business or interest in such business is transferred or in respect of any subsequent year or years: [Provided that where in a scheme of amalgamation or demerger, the amalgamating or the demerged company sells or otherwise transfers the business to the amalgamated or the resulting company (being an Indian company), the provisions of this sub-section- (i) shall not apply in the case of the amalgamating or the demerged company; and (ii) shall, as far as may be, apply to the amalgamated or the resulting company as they would have appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for deduction under Section 42(1)(b) and Section 42(1)(c) of the Income Tax Act, made in the appellant's Income-Tax Return for the Assessment Year 2005-2006, on the ground that a specific reference to the Section 42 deduction has not been made3 expressly in the two PSCs (hereinafter the ADIT's Order ). As a result, the ADIT issued a demand notice under Section 156 of the Income Tax Act to the appellant, demanding payment of ₹ 1,24,45,509.00 (rupees one crore twenty four lakhs forty five thousand five hundred and nine only) by way of additional tax, interest and penalty. The appellant preferred an appeal against the ADIT's order before the relevant Commissioner of Income Tax (Appeals) in Ahmedabad and deposited the sum of ₹ 40,00,000/- (rupees forty lakhs only), as required by ADIT, while himself staying the demand raised by Assessment Order. This appeal has been dismissed by the Commissioner of Income Tax (Appeals) and a further appeal is now pending before the Income Tax Appellate Tribunal. 15) In the meanwhile, on 24.12.2007, the appellant required the Union of India, through the MoPNG and the MoF, to issue an appropriate clarification/amendment with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant filed rejoinder to this counter affidavit controverting the stand which was taken by the respondent. Thereafter, the respondent filed another supplementary affidavit stating that MoF had not concurred with the proposal to extend the benefit of deductions under Section 42 of the Act vide MoF O.M. dated 11.11.2009. Short affidavits were also filed by MoF as well as ADIT taking the position that the appellant was not entitled to benefit of Section 42 of the Act. Rejoinder to these short affidavits was filed by the appellant. Rejoinder was also filed to the supplementary affidavit which has been filed by respondent no. 1. The appellant also filed additional affidavit dated 28.02.2012 giving details of other small sized discovered oil fields PSCs, who were awarded contracts under 1992 NIT, submitting that they were identical to the appellant and in their case clause was inserted giving benefit under Section 42 of the Act. It was pleaded that since they were identically situated as the appellant herein, denying such a benefit to the appellant amounted to hostile discrimination. By another affidavit filed by the appellant, it also tried to demonstrate that respondent no. 1 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orating the said clause? 21) Dealing with the first question, High Court rejected the plea of the appellant that 1992 NIT included and referred to the MPSC as incorrect. It is pointed out that the 1992 NIT did not refer to the MPSC and did not stipulate that MPSC shall form part of the tender documents. It is further stated by the High Court that in 1992 NII, there was no reference to MPSC or that the terms and conditions of the MPSC shall be included in, or be a part of, the PSCs. It is also observed that there is no document or clause in the bid given by the appellant under the 1992 NIT to the effect that the MPSC or clause 16.2 of the same would be applicable and should be a part of the PSCs. In the tender submitted by the appellant there was no specific stipulation to include any clause with regard to the benefit under Section 42 of the Act. The High Court has further observed that written contracts were signed between the appellant and MoPNG in the name of President on 20.,02.1995. Clause 15 of these contracts which pertain to Taxes, Royalties, Rentals, Customs duties etc. though mentions about the applicability of fiscal, there is no reference to Section 42 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essful bidder, was promised or made. 24) Insofar as plea of discrimination between 13 PSCs (which included the appellant), who are not given the benefit of Section 42 of the Act vis-a-vis other PSCs where such a benefit has been extended, the High Court has accepted the explanation put forth by the respondents to the effect that these 13 PSCs formed a different class in as much as their contract was in respect of small oil fields which had already been discovered and, therefore, the risk factor was less. On the other hand, other PSCs were in respect of undiscovered oil fields and for this reason benefit under Section 42 had been granted to them. 25) On the aforesaid reasoning, the High Court concluded that appellant was fully aware of Clause 16.2 of MPSC which specifically makes reference to benefit under Section 42 of the Act, but did not advert to and refer to the same in their tender bid and did not ask for this benefit. Therefore, it was not possible to accept the contention of the appellant that benefit under Section 42 of the Act was inadvertently missed out, or due to an act of oversight, not included in the contract. On this finding, the High Court chose not to exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Co. Ltd. And Another v. State of Gujarat (1975) 1 SCC 199, it is the mutual understanding of the parties to a contract which determines the construction that the court will place on it and this principle squarely applied in the present case. (e) The accounts of the venture were drawn up on the footing that the deductions under Sect5ion 42 were available and that, accordingly, the Income Tax liability would stand reduced. On this footing, a significantly higher amount was computed as the profit share payable to the Government of India under the PSC, which was received by the Government year after year. (f) The reference made by MoPNG to the Ministry of Law in June/ July 1992 and the written opinion given by the Ministry of Law also by themselves clearly established that the intention of the Government from the very beginning was to grant the benefit of Section 42. (g) The I.T. Department itself granted the deductions under Section 42 for several years right upto Assessment Year 2004-05 and then suddenly and unaccountably changed its mind and turned a somersault. (h) The benefit of Section 42 was, in fact, granted to several other small-sized discovered oilfields. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articulars of a number of small-sized oil fields to which Section 42 benefit was given and the Government had not controverted those averments. He submitted that apart from the plea, 13 oil fields (which included the appellant) all other oil fields, whether large, medium or small sized, and whether discovered or exploratory, were given the benefit of Section 42 of the Act. Therefore, the respondents had acted in a grossly arbitrary and discriminatory manner. 30) Last submission of Mr. Ganesh was that the issue regarding Mandamus to be issued to the respondents for amending the contract and including the clause for granting the benefit of Section 42 of the Act was not even gone into, though, it was specifically argued. He further submitted that when the other contracting parties, namely, MoPNG specifically admitted that this provision was left our inadvertently, the Court should have given a direction for amendment of the Contract. In order to support his submission that such a direction can be issued by the High Court in exercise of its powers under Article 226 of the Constitution, he referred to the following judgments: (i) K.N. Guruswamy Vs. State of Mysore 1955 (1) SCR 305 (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract agreed to be between two independent contracting parties and each of the PSCs are distinct from the other and is not a copy of MPSC. He also pointed out that before signing the PSC, the approval of the Cabinet is obtained, which reflects that the PSCs as submitted to the Cabinet, has the approval of one of the contracting party, i.e. Government of India. Therefore, the appellant could not claim to be oblivious of the provisions of law or the contents of the contract at the time of signing and was precluded from seeking retrospective amendment as a matter of right when no such right is conferred under the contract. In support of his submission that the doctrine of fairness and reasonableness applies only in the exercise of statutory or administrative actions of a State and not in the exercise of a contractual obligation and that the issues arising out of contractual matters will have to be decided on the basis of the law of contract and not on the basis of the administrative law, he referred to and relied upon the judgments in Pradeep Kumar Sharma v. U.P. Finance Corporation (2012) 100 SCC 424 and A.B.L. International Limited (supra). 35) From the reading of the writ petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decide as to whether deductions mentioned in the said provision are admissible to the assessee who is claiming those deductions. In other words, the Assessing Officer is supposed to find out as to whether the assessee fulfills the eligibility conditions in the said provision to be entitled to such deductions. We have already reproduced the language of Section 42, which deals with special provisions of deductions in the case of business for prospecting, etc. for mineral oil. Since, the appellant herein, in its income tax returns for the assessment year in question, i.e., Assessment Year 2005-06, had claimed the deductions mentioned in Section 42(1)(b) and (c) of the Act, we should take note of the nature of these deductions. Section 42(1) (b) provides for deductions of expenditure incurred in respect of drilling or exploration activities or services or in respect of physical assets used in that connection, except for those assets on which allowance for depreciation is admissible under Section 32. Section 42(1)(c) speaks of allowances pertaining to the depletion of mineral oil in the mining area. In order to be eligible to the deductions, certain conditions are stipulated in this ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the mere fact that the assessee had offered to pay tax under Section 44 (BB) of the Act in some of the earlier years will not operate as an estoppel to claim the benefit of Double Taxation Avoidance Agreement (DTAA), where the assessee operates under the same PSC which was before the Court. While holding so, the Court had followed its earlier judgment in the case of Enron Oil and Gas India Limited (Supra). 40) In the present case, it is an admitted fact that conditions mentioned in Section 42 of the Act are not fulfilled. In the two PSCs, no provision is made for making admissible the aforesaid allowances to the assessee. It is obvious that the Assessing Officer could not have granted these allowances/deductions to the assessee in the absence of such stipulations, a mandatory requirement, in the PSCs. 41) The appellant is conscious of this position. It is for this reason the attempt of the appellant was to read the provisions of MPSC into the agreement. That bring us to the second issue. 42) Answer to question no. (ii) - Endeavour of Mr. Ganesh, on this aspect, was to show that the bids were invited on the basis of terms stated in the MPSC which specifically mentioned abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set forth. Article 1 - In this Contract, unless the context requires otherwise, the following terms shall have the meaning ascribed to the then hereunder: xxx xxx xxx Article 1.18 Contract means this agreement and the Appendices mentioned herein and attached hereto and made an integral part hereof and any amendments made thereto pursuant to the terms hereof. Article 32 - ENTIRE AGREEMENT, AMENDMENTS, WAIVER AND MISCELLANEOUS 32.1 This Contract supersedes and replaces any previous agreement of understanding between the Parties, whether oral or written, on the subject matter hereof, prior to the Effective Date of this Contract. 32.2 This Contract shall not be amended, modified, varied or supplemented in any respect except by an instrument in writing signed by all the Parties, which shall state the date upon which the amendment or modification shall become effective. 32.3 No waiver by any Party of any one or more obligations or defaults by any other Party in the performance of this Contract shall operate or be construed as a waiver of any other obligations or defaults whether of a like or of a different character. 32.4 The provisions of this Contract shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sofar as giving such a benefit by the Income Tax Authorities is concerned it may not pose a serious problem. We have already held above that on proper construction of the provisions of Section 42 of the Act and application of these provisions to the instant case, the appellant was not entitled to any such deductions under the PSCs. Thus, when in law no such deduction was permissible as per the PSCs in the present form, even if such deduction was given wrongly in the earlier years that would not amount to a wrong act on the part of the Income Tax Authorities and, therefore, would not enure to the benefit of the appellant in the Assessment Year in question as well. The appellant cannot say that merely because this benefit is extended in the previous years; albeit wrongly, this wrong act should continue to perpetuate. There is no estoppel against law. We have taken note of the judgment of this Court in Enron Expat Service Inc. (Supra) where the assessee had offered to pay tax under Section 44(BB) of the Act in the earlier years wrongly and the Court held that it would not operate as an estoppel to claim the benefit of DTAA for the Assessment Year in question when it was found that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cords, in as much as these records have not been produced for our perusal. However, on going through the terms of the PSCs it becomes apparent that such an exercise is not even required. 49) It is stated at the cost of repetition that Article 32 of the contract supersedes any understanding between the parties. Thus, even if it is presumed that there was an understanding between the parties before entering into an agreement to the effect that benefit of Section 42 deduction shall be extended to the appellant, that understanding vanished into thin air with the execution of the two PSCs. Now, for all intent and purpose, it is only the PSCs signed between the parties, which can be looked into. We answer this question accordingly. 50) Undoubtedly, the appellant is also conscious of such a limitation and is aware of the fact that unless there is a clear stipulation in the PSCs for grant of benefit of special allowances under Section 42 of the Act, it would be difficult, nay impossible, for the appellant to sail through. It is for this reason Mr. Ganesh, learned senior counsel for the appellant made a fervent plea that respondents be directed to carry out the amendment in the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion would not make any difference and for this purpose we again revert back to Article 32 which has already been reproduced above. Not only prior understanding between the parties stood superseded as mentioned in Article 32.1, Article 32.2 which is crucial to answer this question, bars any amendment, modification etc. to the said contract except by an instrument in writing signed by all the parties. Thus, unless respondents agree to amend, modify or varied/supplemented the terms of the contract, no right accrues to the appellant in this behalf. 55) We have to keep in mind that the contract in question is governed by the provisions of Article 299 of the Constitution. These are formal contracts made in the exercise of the Executive power of the Union (or of a State, as the case may be) and are made on behalf of the President (or by the Governor, as the case may be). Further, these contracts are to be made by such persons and in such a manner as the President or the Governor may direct or authorize. Thus, when a particular contract is entered into, its novation has to be on fulfillment of all procedural requirements. No doubt, there is an exception to this principle, viz. even in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al principle is taken note of hereinafter. 58) Significantly, in Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust Ors. v. R. Rudani Ors. (1989) 2 SCC 691 as well, this Court made it clear that if the rights are purely of private character, no mandamus can be issued. Thus, even if the respondent is a 'State', other condition which has to be satisfied for issuance of a writ of mandamus is the public duty. In a matter of private character or purely contractual field, no such public duty element is involved and, thus, mandamus will not lie. 59) First case which needs to be referred is Bareilly Development Authority Vs. Ajai Pal Singh and others [1989] 1 SCR 743. That was the case where Appellate Authority had undertaken construction of dwelling units for people belonging to different income groups and the cost at which such flats were to be allotted to the allottees. However, it was mentioned that the cost stated was only estimated cost and subject to increase or decrease according to rise or fall in the price at the time of completion of property. The authority increased the cost and monthly installment rates which it demanded from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comprehended in 'other authority' for the purpose of Article 12 of the constitution, while determining price of the houses/flats constructed by it and the rate of monthly installments to be paid, the Authority or its agent after entering into the field of ordinary contract acts purely in its executive capacity. Thereafter the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines the rights and obligations of the parties inter se. In this sphere they can only claim rights conferred upon them by the contract in the absence of any statutory obligations on the part of the authority (i.e. BDA in this case) in the said contractual field. 22. There is a line of decisions where the contract entered into between the state and the persons aggrieved is non-statutory and purely contractual and the rights are governed only by the terms of the contract, no writ or order can be issued under Article 226 of the Constitution of India so as to compel the authorities to remedy a breach of contract pure and simple Radhakrishna Agarwal Vs. State of Bihar (Supra), Premi Bhai Parmar Vs. Delhi Development Authority and DFO Vs. Biswan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lations, the validity of regulations is not challenged. Therefore, the demand for royalty is supported by law. What the respondent claims is an exception that in view of a certain term in the indenture of lease, to writ, Clause 2, the appellant is not entitled to demand and collect royalty from the respondent. This is nothing but enforcement of a term of a contract of lease. Hence, the question whether such contractual obligation can be enforced by the High Court in its writ jurisdiction. 9. Ordinarily, where a breach of contract is complained of, a party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specifically performed, or the party may sue for damages. Such a suit would ordinarily be cognizable by the Civil Court. The High Court in its extraordinary jurisdiction would entertain a petition either for specific performance of contract or for recovering damages. A right to relief flowing from a contract has to be claimed in a Civil Court where a suit for specific performance of contract or for damages could be filed.... . 62) The question came up for consideration again in the case of Kumari Shrilekha Vidyarthi e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sence of public element attached to the 'office' or post of District Government Counsel of every category covered by the impugned circular. This is sufficient to attract Article 14 of the Constitution and bring the question of validity of the impugned circular within the scope of judicial review. 18. The scope of judicial review permissible in the present case, does not require any elaborate consideration since even the minimum permitted scope of judicial review on the ground of arbitrariness or unreasonableness or irrationality, once Art. 14 is attracted, is sufficient to invalidate the impugned circular as indicated later. We need not, Therefore, deal at length with the scope of judicial review permissible in such cases since several nuances of that ticklish question do not arise for consideration in the present case. 19. Even otherwise and sans the element so obvious in these appointment and its concomitants viewed as purely contractual matters after the appointment is made, also attract Art. 14 and exclude arbitrariness permitting judicial review of the impugned state action. This aspect is dealt with hereafter. 20. Even apart from the premises that 'office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed ideals in the preamble. In our opinion, it would be alien to the Constitutional scheme to accept the argument of exclusion of Art. 14 in contractual matters. The scope and permissible grounds of judicial review in such matters and the relief which may be available are different matters but that does not justify the view of its total exclusion. This is more so when the modern t rend is also to examine the unreasonableness of a term in such contractual where the bargaining power is unequal so that these are not negotiated contracts but standard from contracts between unequal. 22. There is an obvious difference in the contracts between private parties and contracts to which the State is a party. Private parties are concerned only with their personal interest whereas the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it for public good and in public interest. The impact of every State action is also on public interest. This factor alone is sufficient to import at least the minimum requirements of public law obligations and impress with this character the contracts made by the State or its instrumentality. It is a different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter is governed by a non-statutory contract. 65) At this stage, we would like to discuss at length the judgment of this Court in ABL International Ltd. (supra), on which strong reliance is placed upon by the counsel for both the parties. In that case, various earlier judgments right from the year 1954 were taken note of. One such judgment which the Department in support of their case had referred to was the decision of Apex Court in case LIC of India v. Escorts Ltd. (1986) 1 SCC 264 wherein the Court had held that ordinarily in matter relating to contractual obligations, the Court would not examine it unless the action has some public law character attached to it. The following passage from the said judgment was relied upon by the respondents: If the action of the State is related to contractual obligations or obligations arising out of the tort, the court may not ordinarily examine it unless the action has some public law character attached to it. Broadly speaking, the court will examine actions of State if they pertain to the public law domain and refrain from examining them if they pertain to the private law field. The difficulty will lie in demarcating the frontier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, in the normal course, no writ could have been issued against the said industry. But it was the contention of the writ petitioner in that case that the said industry was obligated under the concerned statute to perform certain public functions, failure to do so would give rise to a complaint under Article 226 against a private body. While considering such argument, this Court held that when an authority has to perform a public function or a public duty if there is a failure a writ petition under Article 226 of the Constitution is maintainable. In the instant case, as to the fact that the respondent is an instrumentality of a State, there is no dispute but the question is: was first respondent discharging a public duty or a public function while repudiating the claim of the appellants arising out of a contract ? Answer to this question, in our opinion, is found in the judgment of this Court in the case of Kumari Shri Lekha Vidyarthi Ors. vs. State of U.P. Ors. [1991] (1) SCC 212] wherein this Court held: The impact of every State action is also on public interest. It is really the nature of its personality as State which is significant and must characterize all its actions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the court thinks it necessary to exercise the said jurisdiction. 68) The position thus summarized in the aforesaid principles has to be understood in the context of discussion that preceded which we have pointed out above. As per this, no doubt, there is no absolute bar to the maintainability of the writ petition even in contractual matters or where there are disputed questions of fact or even when monetary claim is raised. At the same time, discretion lies with the High Court which under certain circumstances, can refuse to exercise. It also follows that under the following circumstances, 'normally', the Court would not exercise such a discretion: (a) the Court may not examine the issue unless the action has some public law character attached to it. (b) Whenever a particular mode of settlement of dispute is provided in the contract, the High Court would refuse to exercise its discretion under Article 226 of the Constitution and relegate the party to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y sue for specific performance of the contract, if contract is capable of being specifically performed. Otherwise, the party may sue for damages. (vii) Writ can be issued where there is executive action unsupported by law or even in respect of a corporation there is denial of equality before law or equal protection of law or if can be shown that action of the public authorities was without giving any hearing and violation of principles of natural justice after holding that action could not have been taken without observing principles of natural justice. (viii) If the contract between private party and the State/instrumentality and/or agency of State is under the realm of a private law and there is no element of public law, the normal course for the aggrieved party, is to invoke the remedies provided under ordinary civil law rather than approaching the High Court under Article 226 of the Constitutional of India and invoking its extraordinary jurisdiction. (ix) The distinction between public law and private law element in the contract with State is getting blurred. However, it has not been totally obliterated and where the matter falls purely in private field of contract. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t such a clause, with open eyes. No doubt, the appellant claimed these deductions in its income tax returns and it was even allowed these deductions by the Income Tax Authorities. Further, no doubt, on this premise, it shared the profits with the Government as well. However, this conduct of the appellant or even the respondents, was outside the scope of the contract and that by itself may not give any right to the appellant to claim a relief in the nature of Mandamus to direct the Government to incorporate such a clause in the contract, in the face of the specific provisions in the contract to the contrary as noted above, particularly, Article 32 thereof. It was purely a contractual matter with no element of public law involved thereunder. 72) Having considered the matter in the aforesaid prospective, we come to the irresistible conclusion that the appellant is not entitled to the relief claimed. Though it may be somewhat harsh on the appellant when it availed the benefit of Section 42 for few years and acted on the understanding that such a benefit would be given to it, but we have no option but to hold that PSCs did not provide for this benefit to be given to the appellant and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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