TMI Blog2006 (9) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... On or about 28.02.2003, the parties also agreed that the supply of full tender quantity would be made in the sequence of C, B and A Grades iron ore fines at the prices offered by the Appellant. Indisputably, the Appellant disclosed the names of the parties with which it had entered into agreements to supply iron ore fines procured from the said Respondent. There is no dispute that supply of C-Grade iron ore fines had been made by the Respondent No.2. Indisputably, again supply of 64,236 MT of Grade-B iron ore fines had also been made. It is furthermore not in dispute that the Respondent No.2 offered 25,000 MT of Grade-A iron ore fines to the Appellant herein which was not accepted. It appears that in regard to the supplies made from March, 2003 to September, 2003 there had been no complaint on the part of the Appellant about any breach of contract on the part of the Respondent No.2 On 05.09.2003, a fax was sent by the Appellant requesting the laycan in the following terms : After the successful completion of mv Susan S, we now look forward to receiving the laycan for the next shipment of Grade-B Iron Ore Fines in the month of September. We look forward to receiving your c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantity is available for export after meeting the requirement of NINL. However, despite a reminder, no action had been taken and in the meantime another invitation of tender was published. It is not in dispute that the Appellant also participated in the subsequent tender. A writ petition was filed by the Appellant in the Orissa High Court. In its first counter affidavit the Respondent No.2, inter alia, stated : That the Board Sub-Committee on Sales Policy held on 8.5.2993 of OMC Ltd., decided to review the export of Iron Ore fines on the basis of tender finalized in January-February, 2003. Basing on the above direction the Board of Directors in their 339th meeting held on 26.08.03 took the following decisions : Regarding export of A-grade Iron ore fines, it was decided to examine if there is a penal provision in the agreement/tender for non-fulfillment of obligation on the part of OMC Ltd. It should also examine whether any legal complicacy arises if the A variety ore will be kept reserved for NINL. For the C-grade, Board approved for inviting fresh Tender Accordingly, tender was floated for a quantity of 1,80,000/- MT +/- 10% of C-grade Iron Ore fines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Forest expired on 13.03.2003 and the same was issued afresh by Government of India only on 9.4.2003, during which period there could not be any production. C) Production of A grade Ore was to be made by Selective Mining which could not be possible due to restrictions imposed by the Director General Mines, Safety, Government of India. D) Railway Rakes were not available for transportation of Iron Ore Fines from Daitari to Paradip, despite persuasion of OMC with the Railway Authorities. Further, during the said contractual period OMC has not sold iron ore of any grade to any party other than to M/s. Neelachal Ispat Nigam Ltd., which is wholly Government owned undertaking with which Government of Orissa and OMC has a long term understanding for supply of iron Ore to sustain the steel plant of NINL. By reason of the impugned judgment, a Division Bench of the Orissa High Court dismissed the writ petition, inter alia, opining that it involved enforcement of a contract qua contract and thus not maintainable. Mr. Ashok Desai, the learned Senior Counsel appearing on behalf of the Appellant, would submit : (i) When a State-owned monopoly acts unfairly and unjustly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not supposed to act arbitrarily, capriciously or whimsically. It is trite that if an action on the part of the State is violative the equality clause contained in Article 14 of the Constitution of India, a writ petition would be maintainable even in the contractual field. A distinction indisputably must be made between a matter which is at the threshold of a contract and a breach of contract; whereas in the former the court s scrutiny would be more intrusive, in the latter the court may not ordinarily exercise its discretionary jurisdiction of judicial review, unless it is found to be violative of Article 14 of the Constitution. While exercising contractual powers also, the government bodies may be subjected to judicial review in order to prevent arbitrariness or favouritism on its part. Indisputably, inherent limitations exist, but it would not be correct to opine that under no circumstances a writ will lie only because it involves a contractual matter. This dicta of law was laid down by this Court as far back in1977, wherein this Court in Radhakrishna Agarwal and Others v. State of Bihar and Others [(1977) 3 SCC 457] accepted the division of types of cases made by the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, and, thus, for determination thereof, examination of witnesses would be necessary; it may not be convenient to decide the dispute in a proceeding under Article 226 of the Constitution of India. On a conspectus of several decisions, a Division Bench of this Court in ABL International Ltd. (supra) opined that such a writ petition would be maintainable even if it involves some disputed questions of fact. It was stated that no decision lays down an absolute rule that in all cases involving disputes questions of facts, the party should be relegated to a civil court. In Mahabir Auto Stores Others v. Indian Oil Corporation and Others [(1990) 3 SCC 752], this Court observed : It appears to us that rule of reason and rule against arbitrariness and discrimination, rules of fair play and natural justice are part of the rule of law applicable in situation or action by State instrumentality in dealing with citizens in a situation like the present one. Even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in law to act fairly, justly and reasonably which is the requirement of Article 14 of the Constitution of India. Therefore, if by the impugned repudiation of the claim of the appellants the first respondent as an instrumentality of the State has acted in contravention of the abovesaid requirement of Article 14, then we have no hesitation in holding that a writ court can issue suitable directions to set right the arbitrary actions of the first respondent\005 Contractual matters are, thus, not beyond the realm of judicial review. Its application may, however, be limited. Although terms of the invitation to tender may not be open to judicial scrutiny, but the courts can scrutinize the award of contract by the Government or its agencies in exercise of their power of judicial review to prevent arbitrariness or favouritism. [See Directorate of Education and Others v. Educomp Datamatics Ltd. and Others (2004) 4 SCC 19]. However, the court may refuse to exercise its jurisdiction, if it does not involve any public interest. Although the scope of judicial review or the development of law in this field has been noticed hereinbefore particularly in the light of the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t within the permissible limits of interference for a court of law, particularly when there has been no allegation of malice or ulterior motive and particularly when the court has not found any mala fides or favouritism in the grant of contract in favour of the appellant\005 It was further held : Therefore, though the principle of judicial review cannot be denied so far as exercise of contractual powers of government bodies are concerned, but it is intended to prevent arbitrariness or favouritism and it is exercised in the larger public interest or if it is brought to the notice of the court that in the matter of award of a contract power has been exercised for any collateral purpose. But on examining the facts and circumstances of the present case and on going through the records we are of the considered opinion that none of the criteria has been satisfied justifying Court s interference in the grant of contract in favour of the appellant\005 We, however, having regard to ABL International Ltd (supra), do not accept Dr. Dhawan s contention that only because there exists a disputed question of fact or an alternative remedy is available, the same by itself would be suffi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent basis. OMC would have concluded the contract for the entire tender quantity in one lot with M/s Noble Resources Ltd. Hong Kong had there been no constraint for convergence of cargo to Paradip\005if the balance quantity against the tender norms would have been supplied to the petitioner company at the tendered prices of February, 2003 the Corporation would have incurred huge loss as the price of iron ore in the International Market has increased manifold. We may herein notice a statement on tenders floated and accepted in respect of the iron ore fines after 30.09.2003, which is as under : DATE OF TENDER OPENING QUALITY OF IRON ORE FINES QUANTITY HIGHEST PRICE Quoted Price in by USD/DMT PRICE QUOTED BY NOBLE USD/D MT SEE PRICE IN TENDER AT P.50 12.11.03 http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 12 B-Grade-60,000 MT +- 10% C, Grade- 60,000 MT+- 10% M/s Burwill Hong Kong M/s Burwill Hong Kong 47.10 45.10 31.75 29.25 14.96 13.86 03.02.04 C-Grade- 1.20,000 MT +- 10% Sudamin Metal, London 63.30 59.80 13.86 20.03.04 C-Grade- 1,20,000 MT +- 10% VISA Comtrade, AG, Switzerland 75.06 62.68 13.86 22.06.04 C-Grade- 1,20,,000 MT +- 10% Noble Resources, Hong Kong 25.70 25. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply thereof was the rise in international prices, are matters which could not have been fully and effectively adjudicated in the writ proceedings. It was difficult for the High to go into the other questions which have been raised before us by the Appellant, namely, the effect of the purported decision of OMC to offer to the Appellant 60,000 MT of A Grade iron ore fines provided the Appellant gave up all other contractual rights which stating the bad faith on the part of OMC. We may, however, notice that although a decision had allegedly been taken by OMC not to supply iron ore fines prior to the expiry of the contractual period, but the same had not been communicated. Its effect has to be determined keeping in view the fact as to whether the Appellant suffered any loss thereby. The reasons for non-supply, we may reiterate, may constitute a breach of contract but having regard to the conduct of the parties, it cannot be said that the same was so arbitrary so as to attract the wrath of Article 14 of the Constitution of India. Before us also what has been emphasized is the purported breaches of contract by the Respondent. A contention has also been raised by Mr. Desai that keepi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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