32, 226, and 1872: The applicability of Writ Petitions in Contractual Matters1

Abstract

Articles 32 and 226 of the Constitution of India provide the power of issuing writ
petitions to the Apex Court and the High Court, respectively. This is an extra
ordinary jurisdiction and extends to the action of the State or any authority endowed
with State authority and empowers the aforementioned Courts to issue direction to
the State and the authorities to act in accordance with those directions. This extra
ordinary power must be exercised sparingly and cautiously and in exceptional
situations only. Can the writ jurisdiction be exercised when the State is not acting in
an administrative but only in a contractual capacity?

“Experience teaches us to be most on our guard to protect liberty

when the government's purposes are beneficient”2

The Articles 32 and 226 of the Constitution of India give the power of issuing writs
to the Supreme Court and High Courts respectively. These 5 kinds of writs, viz.
Mandamus, Certiorari, Prohibition, Quo Warranto, Habeas Corpus , can be issued in
case of the breach of Fundamental Rights of any citizen by the State. The purpose
behind it is to control the administrative actions by the same and to prevent any
arbitrary use of power. The reiteration of the aforesaid principles by the Supreme
Court is very important especially today, when the Government is entering into
partnership with private parties for various infrastructure projects under PPP model.

In the case of Joshi Technologies v. UOI & Ors.3 the Supreme Court ruled that “If the
contract between private party and the State… is under the realm of a private law
and there is no element of public law, writ jurisdiction generally would not survive.”
The SC upheld the Delhi HC ruling, dismissing Joshi Technology’s writ petition and
denying Sec 42 benefit to the latter in respect of oil-exploration contract entered with
Ministry of Petroleum and Natural Gas (MoPNG). The SC reiterated some of the
basic principles governing the subject of the case in the context of section 42 of the
Income Tax Act, 1961.

The SC ruled that no writ of mandamus can be issued in instant case by holding that
"In a matter of private character or purely contractual field, no such public duty
element is involved and, thus, mandamus will not lie.” It was contended that in pure
contractual matters, extraordinary remedy of writ under Article 226 or Article 32 of
the Constitution cannot be invoked. However, in a limited sphere such remedies are
available only when the non-Government contracting party is able to demonstrate
that it is a public law remedy which such party seeks to invoke, in contradistinction
to the private law remedy.

A Bench of the Apex Court comprising of Justices A.K. Sikri and Rohinton F.
Nariman, said that 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 claims are raised.

1
Priyamvada Singh, 2nd Semester, LLB(H), Galgotias University, Greater Noida
2
Louis D. Brandeis
3
https://indiankanoon.org/doc/77081689/
The Court further said – “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. Two paragraphs from the judgement thence are
presented below:

Para 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 the said made of settlement, particularly when
settlement of disputes is to be resorted to through the means of arbitration.

(c) If there are very serious disputed questions of fact which are of complex nature
and require oral evidence for their determination.

(d) Money claims per se particularly arising out of contractual obligations are
normally not to be entertained except in exceptional circumstances.”

Para 69: Further legal position which emerges from various judgments of this Court
dealing with different situations/aspects relating to the contracts entered into by the
State/public Authority with private parties, can be summarized as under:

(i) At the stage of entering into a contract, the State acts purely in its executive
capacity and is bound by the obligations of fairness.

(ii) State in its executive capacity, even in the contractual field, is under obligation to
act fairly and cannot practice some discrimination.

(iii) Even in cases where question is of choice or consideration of competing claims

before entering 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 detailed evidence, Involving examination and cross-
examination of witnesses, the case could not be conveniently or satisfactorily decided
in proceedings under Article 226 of the Constitution. In such cases court can direct
the aggrieved party to resort to alternate remedy of civil suit etc.

(iv) Writ jurisdiction of High Court under Article 226 was not intended to facilitate
avoidance of obligation voluntarily incurred.

(v) Writ petition was not maintainable to avoid contractual obligation. Occurrence of
commercial difficulty, inconvenience or hardship in performance of the conditions
agreed to in the contract can provide no justification in not complying with the terms
of contract which the parties had accepted with open eyes. It cannot ever be that a
licensee can work out the license if he finds it profitable to do so: and he can
challenge the conditions under which he agreed to take the license, if he finds it
commercially inexpedient to conduct his business.

(vi) Ordinarily, where a breach of contract is complained of, the party complaining of
such breach may 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, this Court has maintained the position
that writ petition is not maintainable. Dichotomy between public law and private law,
rights and remedies would depend on the factual matrix of each case and the
distinction between public law remedies and private law, field cannot be demarcated
with precision. In fact, each case has to be examined, on its facts whether the
contractual relations between the parties bear insignia of public element. Once on the
facts of a particular case it is found that nature of the activity or controversy involves
public law element, then the matter can be examined by the High Court in writ
petitions under Article 226 of the Constitution of India to see whether action of the
State and/or instrumentality or agency of the State is fair, just and equitable or that
relevant factors are taken into consideration and irrelevant factors have not gone into
the decision making process or that the decision is not arbitrary.”4

Keeping in mind the aforesaid principles and after considering the the facts of the
case the SC held that this is not a fit case where the High Court should have
exercised discretionary jurisdiction under Article 226 of the Constitution. The SC
thus confirmed the order of the High Court.

Apparent enough from the above that challenge lies in demarcating and identifying
the line between the public law domain and the private law field, identifying the
public duty, and the public cause. It is impossible to draw the line with precision and
lay down in black and white the principles governing such demarcation. This calls
for a case-to-case basis solution, based on the particulars of the actions presented, the
activity in which the State or the instrumentality of the State is engaged when
performing the action, the public law or private law character of the action and a host
of other relevant circumstances.

In the case of M/s Acer India Private Limited Vs State of Chhattisgarh5

It is held that the petitioner has miserably failed to make out a case for interference in
exercise of extra-ordinary jurisdiction under Article 226 of the Constitution of India
within the four corners of law and yardsticks set out by Their Lordships of the
Supreme Court in the above-quoted judgements (supra) qua interference in
contractual matter. We accordingly, hold that there is no reason to exercise the power
of judicial review in this instant matter, as the petitioner has not been able to
demonstrate arbitrariness, unfairness, illegality, irrationality or unreasonableness in
the impugned decision of rejecting its technical bid and awarding rate contract to
respondent No. 3.

Recently, in the case of M/S IPJacket Technology India Private Limited v. M.D Uttar
Pradesh Rajkiya Nirman Nigam Limited6 the Allahabad High Court recently had
occasion to reiterate that the Court's extraordinary writ jurisdiction under Article 226
of the Constitution cannot be invoked in purely contractual matters that only involve
private rights.

4
http://thepracticeoflawjalan.blogspot.com/2015/05/contractual-matters-exercise-of-writ.html
5
https://indiankanoon.org/doc/188074519/
6
https://indiankanoon.org/doc/96390999/
 The Division Bench, consisting of Justices PK Jaiswal and YK Srivastava, opined
that,

"The remedy under Article 226 of the Constitution being an extraordinary remedy, it
is not intended to be used for the purpose of declaring private rights of the parties. In
the case of enforcement of contractual rights and liabilities the normal remedy of
filing a civil suit being available to the aggrieved party, this Court may not exercise
its prerogative writ jurisdiction to enforce such contractual obligations."

The case before the Court involved a tender bid for the maintenance of the CCTV
surveillance system at the Allahabad High Court. The Uttar Pradesh Rajkiya Nirman
Nigam Ltd. (UPRNN) eventually awarded the contract (an 'Annual Maintenance
Contract') to the UP Small Industries Corporation (UPSIC). The UPSIC is then said
to have tasked the petitioner with certain tasks related to the execution of this
contract. The petitioner, ITPL also contended that an agreement had been entered
into between ITPL and UPSIC in this regard.

ITPL was prompted to approach the High Court by invoking its writ jurisdiction to
claim relief over certain disputes arising out of this agreement. However, UPRNN
and other respondents contested the maintainability of this writ petition, pointing out
that the matter was contractual in nature. It was contended that the appropriate forum
to settle the contractual rights and obligations referred to in the dispute was a civil
court.

Concurring with this stance, the Bench observed that the writ jurisdiction of High
Courts cannot be invoked in contractual disputes, unless a public law remedy is
involved. As noted in the judgment,

"We may note that the law in this regard as developed through a catena of judgments
is that in pure contractual matters the extra ordinary remedy of a writ under Article
226 of the Constitution of India cannot be invoked, and such remedies are available
in a limited sphere only when the contracting party is able to demonstrate that the
remedy it seeks to invoke is a public law remedy, in contradistinction to a private law
remedy under a contract."

This principle would apply even if a State authority is involved in the dispute. The
Court held,

"The legal position in this regard is that where the rights which are sought to be
agitated are purely of a private character no mandamus can be claimed, and even if
the relief is sought against the State or any of its instrumentality the pre condition for
the issuance of a writ of mandamus is a public duty. In a dispute based on a pure
contractual relationship there being no public duty element, a mandamus would not
lie.

...where the contract entered into between the State and the person aggrieved is of a
non-statutory character and the relationship is governed purely in terms of a
contract between the parties, in such situations the contractual obligations are
matters of private law and a writ would not lie to enforce a civil liability arising
purely out of a contract.

The proper remedy in such cases would be to file a civil suit for claiming damages,
injunctions or specific performance or such appropriate reliefs in a civil court. Pure
contractual obligation in the absence of any statutory complexion would not be
enforceable through a writ."

The Court also admitted that in the bar on entertaining contractual matters by
invoking writ jurisdiction is not an absolute bar. However, the Court's discretion to
entertain such contractual matters would depend on whether there is a claim for a
public law remedy. As stated in the judgment,

"... though in contractual matters where disputed questions of fact or monetary

claims have been raised, there may not be an absolute bar to the maintainability of
the writ petition, the discretion can be exercised by the High Court only in a case
where the contracting party is able to demonstrate that it is a public law remedy it
seeks to invoke in contradistinction to a private law remedy simpliciter under the
contract.”

In the case at hand, however, no such public law remedy was found to be involved.
Therefore, the Court dismissed the petition.

In the case of M/s Surya Constructions v. The State of Uttar Pradesh & Ors7
appellants had challenged the High Court’s order dismissing writ petition stating that
disputed questions of fact arise in the case and that the amount due arises out of a
contract.

The present is a case in which payment for extra work by the Uttar Pradesh Jal
Nigam has not been made though such work was expressly sanctioned and done to
their satisfaction.

When the matter came before the Supreme Court, the Two-Judge Bench of the Court
was of the view that the High Court’s verdict was wholly incorrect as there was no
disputed question of fact and that the amount payable to the Appellant is wholly
undisputed. The Court was also of the opinion that in the case of arbitrary behaviour
by the State, the HC stands to interfere under Article 226, even if it came under the
realm of contract. Hence, the Apex Court directed the Uttar Pradesh Jal Nigam to
make the payment within stipulated time.

Some other cases, where the maintainability of Writ Petitions in Contractual Matters
were discussed, are mentioned below:

Chetlal Sao And Anr. vs State Of Bihar And Ors. on 17 December, 19858

“Para 15 Re: Contention No. 3:- this contention is also well founded and must prevail. There
is abundant authority in favour of the proposition that a writ of mandamus can be granted
only in a case where there is a statutory duty imposed upon the officer concerned and there
is a failure on the part of that officer to discharge the statutory obligation. the chief function
of a writ is to compel performance of public duties prescribed by statute and to keep
subordinate tribunals and officers exercising public functions with in the limit of their
jurisdiction. It follows, therefore, that in order that mandamus may issue to compel the
authorities to do something, it must be shown that there is a statute to enforce its
performance. In the instant case, it has not been shown by respondent No. 1 that there is
any statute or rule having the force of law which casts a duty on respondents 2 to 4 which
they failed to perform. All that is sought to be enforced is an obligation flowing from a
contract which, as already indicated, is also not binding and enforceable. Accordingly, we
are clearly of the opinion that respondent No. 1 was not entitled to apply for grant of a writ
of mandamus under Art. 226 of the Constitution and the High Court was not competent to
issue the same.”

7
https://www.sci.gov.in/supremecourt/2014/28076/28076_2014_Order_08-Mar-2019.pdf
88
AIR 1977 SC 2149
Tata Cellular V/s. Union of India9

“Para 12: The principles which have to be applied in judicial review of

administrative decisions, especially those relating to acceptance of tender and award
of contract, have been considered in great detail by a three Judge Bench in Tata
Cellular V/s. Union of India., AIR 1996 SC 11 It was observed that the principles of
judicial review would apply to the exercise of contractual powers by Government
bodies in order to prevent arbitrariness or favouritism. However, it must be clearly
stated that there are inherent limitations in exercise of that power of judicial review.
Government is the guardian of the finances of the State. It is expected to protect the
financial interest of the State. The right to refuse the lowest or any other tender is
always available to the Government. But, the principles laid down in Art. 14 of the
Constitution have to be kept in view while accepting or refusing a tender. There can
be no question of infringement of Art. 14 if the Government tries to get the best
person or the best quotation. The right to choose cannot be considered to be an
arbitrary power. Of course, if the said power is exercised for any collateral purpose
the exercise of that power will be struck down. (See para 85 of the reports.)

Para 13: After an exhaustive consideration of a large number of decisions and

standard books on Administrative Law, the Court enunciated the principle that the
modern trend points to judicial restraint in administrative action. The Court does not
sit as a court of appeal but merely reviews the manner in which the decision was
made. The Court does not have the expertise to correct the administrative decision. If
a review of the administrative decision is permitted it will be substituting its own
decision, without the necessary expertise, which itself may be fallible. The
Government must have freedom of contract. In other words, a fairplay in the joints is
a necessary concomitant for an administrative body functioning in an administrative
sphere or quasi- administrative sphere. However, the decision must not only be
tested by the application of Wednesbury principles of reasonableness but must be
free from arbitrariness not affected by bias or actuated by mala fides. It was also
pointed out that quashing decisions may impose heavy administrative burden on the
administration and lead to increased and unbudgeted expenditure. (See para 113 of
the reports.)

Para 14: In Sterling Computers Ltd. V/s. M/s M.N. Publications Ltd., AIR 1996 SC
51 it was held as under:

"While exercising the power of judicial review, in respect of contracts entered into
on behalf of the State, the Court is concerned primarily as to whether there has been
any infirmity in the "decision making process." By way of judicial review the Court
cannot examine the details of the terms of the /contract which have been entered into
by the public bodies or the State. Court have inherent limitations on the scope of any
such enquiry. But at the same time the Courts can certainly examine whether
"decision making process" was reasonable rational, not arbitrary and violative of
Art. 14 of the Constitution. If the contract has been entered into without ignoring the
procedure which can be said to be basic in nature and after an objective
consideration of different options available taking into account the interest of the
State and the public, then Court cannot act as an appellate authority by substituting
its opinion in respect of selection made for entering into such contract..........."

Para 15: In Raunaq International Ltd. V/s. I.V.R. Construction Ltd., 1999 1 SCC 492
it was observed that the award of a contract, whether it is by a private party or by a
public body or the State, is essentially a commercial transaction. In arriving at a
commercial decision, considerations which are of paramount importance are
commercial considerations, which would include, inter alia, the price at which the
party is willing to work, whether the goods or services offered are of the requisite
specifications and whether the person tendering is of ability to deliver the goods or
services as per specifications.

Para 16: The law relating to award of contract by State and public sector
corporations was reviewed in Air India Ltd. V/s. Cochin International Airport Ltd.,

9
AIR 2005 SC 2299
2000 2 SCC 617 and it was held that the award of a contract, whether by a private
party or, by a State, is essentially a commercial transaction. It can choose its own
method to arrive at a decision and it is free to grant any relaxation for bona fide
reasons, if the tender conditions permit such a relaxation. It was further held that the
State, its corporations, instrumentalities and agencies have the public duty to be fair
to all concerned. Even when some defect is found in the decision making process, the
Court must exercise its discretionary powers under Art. 226 with great caution and
should exercise it only in furtherance of public interest and not merely on the making
out of a legal point. The Court should always keep the larger public interest in mind
in order to decide whether its intervention is called for or not. Only when it comes to
a conclusion that overwhelming public interest requires interference, the Court
should interfere.”

Gujarat State Financial ... vs Lotus Hotels Pvt. Ltd.10

“Para 8: It was next contended that the dispute between the parties is in the realm of
contract and even if there was a concluded contract between the parties about grant
and acceptance of loan, the failure of the Corporation to carry out its part of the
obligation may amount to breach of contract for which a remedy lies elsewhere but a
writ of mandamus cannot be issued compelling the Corporation to specifically
perform the contract. It is too late in the day to contend that the instrumentality of
the State which would be other authority under Article 12 of the Constitution can
commit breach of a solemn undertaking on which other side has acted and then
contend that the party suffering by the breach of contract may sue for damages but
cannot compel specific performance of the contract. It was not disputed and in
fairness to Mr. Bhatt, it must be said that he did not dispute that the Corporation
which is set up under Section 3 of the State Financial Corporations Act, 1951 is an
instrumentality of the State and would be 'other authority' under Article 12 of the
Constitution. By its letter of offer dated July 24, 1978 and the subsequent agreement
dated February 1, 1979 the appellant entered into a solemn agreement in
performance of its statutory duty to advance the loan of Rs. 30 lakhs to the
respondent. Acting on the solemn undertaking, the respondent proceeded to
undertake and execute the project of setting up a 4-Star Hotel at Baroda. The
agreement to advance the loan was entered into in performance of the statutory duty
cast on the Corporation by the statute under which it was created and set up. On its
solemn promise evidenced by the aforementioned two documents, the respondent
incurred expenses, suffered liabilities to set-up a hotel. Presumably, if the loan was
not forthcoming, the respondent may not have undertaken such a huge project.
Acting on the promise of the appellant evidenced by documents, the respondent
proceeded to suffer further liabilities to implement and execute the project. In the
back drop of this incontrovertible fact situation, the principle of promissory estoppel
would come into play. In Motilal Padampat Sugar Mills Co. (P.) Ltd. v. State of U.P.
(1979) 2 SCR 641 at p. 662, this Court observed as under:

"The true principle of promissory estoppel, therefore seems to be that where one
party has by his Words of conduct made to the other a clear and unequivocal
promise which is intended to create legal relations or affect a legal relationship to
arise in the future, knowing or intending that it would be acted upon by the other
party to whom the promise is made and it is in fact so acted upon by the other party,
the promise would be binding on the party making it and he would not be entitled to
go back upon it, if it would be inequitable to allow him to do so having regard to the
dealings which have taken place between the parties, and this Would be so
irrespective whether there is any pre-existing relationship between the parties or
not."

Para 9: Thus the principle of promissory estoppel would certainly estop the
Corporation from backing out of its obligation arising from a solemn promise made
by it to the respondent.

10
AIR 1983 SC 848
Para 10: Jeet Ram Shiv Kumar v. State of Haryana , (1980) 3 SCR 689 which
slightly differs from the view taken by this Court in the aforementioned decision at
any rate would not help the appellant because it only lays down that the principle of
promissory estoppel cannot be invoked for preventing the Government from
discharging its functions under the law. Even then, it was held that when the officer
authorised under a scheme enters into an agreement and makes a representation and
a person acting on that representation puts himself in a disadvantageous position,
the Court is entitled to regulate the officer to act according to the scheme and the
agreement or the representation. The officer cannot arbitrarily on his mere whim
ignore his promise on some undefined and undisclosed grounds of necessity or
changed the conditions to the prejudice of a person which had acted upon such
representation and put himself in an disadvantageous position. On this point, both
the decisions concur and the ratio would govern the decision in this appeal. The
respondent acting upon solemn promise made by the appellant incurred huge
expenditure and if the appellant is not held to its promise, the respondent would be
put in a very disadvantageous position and therefore also the principle of promissory
estoppel can be invoked in this case. . .

Para 11: Viewing the matter from a slightly different angle altogether, it would
appear that the appellant is an instrumentality of the Government and would be
'other authority' under Art. 12 of the Constitution. If it be so, as held by this Court in
R. D. Shetty v. International Airports Authority of India (1979) 3 SCR 1014 at p.
1041 the rule inhibiting arbitrary action by the Government would equally apply
Where such corporation dealing with the public whether by way of giving jobs or
entering into contracts or otherwise and it cannot act arbitrarily and its action must
be in conformity with some principle which meets the test of reason and relevance.

Para 12: Now if appellant entered into a solemn contract in discharge and
performance of its statutory duty and the respondent acted upon it, the statutory
corporation cannot be allowed to act arbitrarily so as to cause harm and injury,
flowing from its unreasonable conduct, to the respondent. In such a situation, the
Court is not powerless from holding the appellant to its promise and it can be
enforced by a writ of mandamus directing it to perform its statutory duty. A petition
under Article .226 of the Constitution would certainly lie to direct performance of a
statutory duty by 'other authority' as envisaged by Article 12.”

Food Corporation Of India Versus M/s.Seil Ltd.11

“Para 15: Jurisdiction of the High Court to entertain a writ application involving
contractual matter was considered by a Bench of this Court in ABL International
Ltd. & Anr. V/s. Export Credit Guarantee Corporation of India Ltd. & Ors., 2004 3
SCC 553 wherein upon referring to a large number of decisions, it was held :

"23. It is clear from the above observations of this Court, once the State or an
instrumentality of the State is a party of the contract, it has an obligation in law to
act fairly, justly and reasonably which is the requirement of Art. 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 Art. 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."

Para 16: Reliance placed by Mr. Sharan on M/s. Burmah Construction Company
V/s. The State of Orissa & Ors., AIR 1962 SC 1320 is not apposite. Claim made
therein was a pure money claim. It was in that situation observed that the High Court
normally does not entertain a petition under Art. 226 of the Constitution to enforce a
civil liability arising out of a breach of contract to pay an amount of money due to
the claimant.

11
AIR 2008 SC 1101
Para 17: Article 14 of the Constitution of India has received a liberal interpretation
over the years. Its scope has also been expanded by creative interpretation of the
court. The law has developed in this field to a great extent. In this case, no disputed
question of fact is involved.
The High Court, in an appropriate case, may grant such relief to which the writ
petitioner would be entitled to in law as well as in equity.

We do not, thus, find any substance in the contention of Mr. Sharan that while
exercising its review jurisdiction, no interest on the principal sum could have been
directed to be granted by the High Court. A writ court exercises its power of Review
under Art. 226 of the Constitution of India itself. While exercising the said
jurisdiction, it not only acts as a court of law but also as a court of equity. A clear
error or omission on the part of the court to consider a justifiable claim on its part
would be subject to review; amongst others on the principle of actus curiae neminem
gravabit (An act of the courts shall prejudice none). We appreciate the manner in
which the learned Judge accepted his mistake and granted relief to the respondents.”

State Of Madhya Pradesh Versus M.V.Vyavsaya And Company12

“Para 15: It has been repeatedly held by this Court that the power of the High Court
under Art. 226 of the Constitution is not akin to appellate power. It is a supervisory
power. While exercising this power, the Court does not go into the merits of the
decision taken by the authorities concerned but only ensures that the decision is
arrived at in accordance with the procedure prescribed by law and in accordance
with the principles of natural justice wherever applicable. Further, where there are
disputed questions of fact, the High Court does not normally go into or adjudicate
upon the disputed questions of fact. Yet another principle which has been repeatedly
affirmed by this Court is that a person who solemnly enters into a contract cannot be
allowed to wriggle out of it by resorting to Art. 226 of the Constitution. This Court
has also repeatedly emphasised the inadvisability of making interim orders which
have the effect of depriving the State (the people of the State) of the revenues
legitimately due to it. The Court should not take upon itself the responsibility of
staying the recovery of amounts due to State unless a clear case of illegality is made
out and the balance of convenience is duly considered. Otherwise, the odium of
unlawfully depriving the State/the people of the monies lawfully due to it/them would
lie upon the Court. Particularly in the case of excise contracts, generally speaking, it
is well nigh impossible to recover any arrears after the event. It is for this reason
that the rules of all the States insist upon adequate deposits and securities
beforehand to be adjusted towards the last months of the year. These provisions and
the spirit underlying them cannot be ignored or violated. Now, in the case of this
contract, the loss to the State is the whopping sum of Rs. 2,88,54,431.00 How much
of this loss is attributable to the impugned orders is difficult to assess but it can be
said with certainty that but for these orders, the State would have conducted the re-
auction in the month of May, 1995 itself in which event the loss to the State would
have been far less. The respondent-firm carried on till December, 1995 without
properly and fully paying the amounts due under the orders of the Court. A very,
very sad tale.

Para 16: In Chief Constable of the North Wales Police V/s. Evans, 1982 3 AllEng.
141, the House of Lords has observed that "the purpose of judicial review is to
ensure that the individual receives fair treatment, and not to ensure that the
authority, after according fair treatment, reaches on a matter which it is authorised
or enjoined by law to decide for itself a conclusion which is correct in the eyes of the
Court". This principle has been referred to with approval in innumerable decisions

12
AIR 1997 SC 993
of this Court. This decision clearly sets out the limits of the supervisory power under
Art. 226 of the constitution and emphasises that the jurisdiction under the said
Article is neither unlimited nor unrestrained, much less unguided.

Para 17: A Constitution Bench of this Court held in Har Shankar V/s. Deputy Excise
and Taxation Comm., 1975 1 SCC 737, that "the writ jurisdiction of High Courts
under Art. 226 of the Constitution is not intended to facilitate avoidance of
obligations voluntarily incurred." Of course, where there is a statutory violation,
interference would be permissible even in the case of a contract but not where the
relevant facts are disputed and which dispute calls for a elaborate enquiry which
cannot be conveniently by the High Court in a writ petition.”

Various courts are still against the maintainability of writ petitions in contractual
matters, some of which are mentioned hence:
M/S Maa Durga Enterprises v. The Bihar Industrial Area Development Authority
and Others, Nivedita Sharma v. Cellular Operators Association of India13,
Commissioner of Income Tax v. Chhabil Dass Agrawal14 , Harbanslal Sahnia vs.
Indian Oil Corpn. Ltd.15, Mina Perween vs The State Of West Bengal & Ors16

Thus, it is apparent that the scope of judicial review in respect of disputes falling
within the domain of contractual obligations depends on case to case basis. It is at the
discretion of the Court to entertain a writ petition. The Courts practice restrictions in
the exercise of this power. The Courts don’t exercise this right if there are other
remedies available, however, if such action of the State is arbitrary and unreasonable
and violates Article 14, for which the court thinks it necessary to exercise the said
jurisdiction.

13
2011 14(SCC) 337
14
(2014) 1 SCC 603
15
(2003) 2 SCC 107
16
https://indiankanoon.org/doc/36610961/