JUDGMENT
S.B. Sinha, C.J.
1. These three writ petitions involving common questions of
law and fact were taken up for hearing together and are
being disposed of by this common judgment.
2. A notice inviting tender was floated on 14.06.2000 for sale
of various lots of old TMB Engines belonging to respondent
Nos. 2 and 3 lying at VSD Meerut, U.P. The petitioners
herein submitted their tenders, which are said to be the
highest. They allegedly also complied with all tender
conditions.
According to the petitioners, having regard to the fact that
not only did they deposit the earnest amount, i.e., 20% of
the bid amount along with their tender, but also deposited
balance 80 % within one day, namely, 01.07.2000 on
acceptance of their offer; but despite the fact that the same
was required to be deposited within one week of the date of
acceptance of the tender and they were entitled to obtain the
delivery order, no action in this behalf was taken. The
petitioners with their letter dated 21.07.2000 submitted that
they duly deposited MRO No. 1341 showing payment made
with the RBI and also submitted pay order No. 693889 of
Syndicate Bank, New Delhi for Rs. 46,000/- towards Sales
Tax being @ 8% with respondent No. 1 and requested him to
issue the delivery order to enable it to take delivery of the
purchased goods.
The respondent No. 1, however, refused to issue the said
delivery order on the ground that certain instructions have
been received by respondent No. 3 not to do so.
According to the petitioner, thereafter various
representations were made, but respondent No. 1 herein
refused to deliver the sold goods to the petitioner on the
ground that an instruction in that regard had been received
from respondent No. 2.
3. According to the petitioner, neither terms and conditions of
the contract nor the law permits withdrawal from a contract
when concluded contract has come into being. The action
on the part of the respondents, the petitioner would
contend, is highly arbitrary.
The writ petitioner in C.W.P. No. 6529 of 2000 inter alia
claimed for the following reliefs :-
“IT IS THEREFORE PRAYED THAT this Hon’ble
Court may kindly be pleased to issue
appropriate writ order or direction especially:
a. In the nature of certiorari quashing the
letter dtd. 4th October, 2000, of
respondent No. 1 alleging withdrawal of
the sale order cum acceptance letter dtd.
20th July, 2000, with respect to tender
No. MSTC/T-85/2000/OD-SKB dated
14.6.2000.
b. In the nature of mandamus directing the
respondents to issue the delivery order
for lot Nos. T-85/399, T-85/400
forthwith and give delivery of the said
lots to the petitioner and further pay
damages to the petitioner @ Rs. 12,500/-
per day from 21st July, 2000 till the
goods are delivered to the petitioner.”
The writ petitioners in C.W.P. No. 6530 of 2000 and C.W.P.
No. 6531 of 2000 in Clause (b) of the prayer sought
directions to the respondents to issue the delivery orders for
lot Nos. T-85/396, T-85/397 and T-85/398; and Nos. T-
85/392, T-85/393 and T-85/394 respectively.
4. The respondents in their counter affidavit, on the other
hand, averred that a complaint was received to the effect
that the advertisement did not properly state the location
and quota of the engines to be sold and in that view of the
matter several persons could not participate in the auction.
According to the respondents, the engines were sold at
lesser price and the difference in the price for 226 engines
would amount to Rs. 16,03,000.05. It was stated that there
was a mix up of engines as 4 x 6.5 ton engines were mixed
with 3 ton TMB engines in the lots, which were offered for
sale. Upon receipt of complaint, verifications were carried
out and it was confirmed that 6.5 ton engines were mixed
with 3 ton engines and the location of certain lots were not
shown as VSD Meerut in the auction catalogue due to which
healthy competition could not be generated.
It was contended :-
(i) For certain lots, location of Engines was not
mentioned as VSD Meerut;
(ii) Number of Engines put up for auction was not
mentioned; and
(iii) Engine assemblies were shown lying in OD
Shakurbasti, whereas they were actually lying in VSD
Meerut.
On verification, it has allegedly further been found :-
“(d) On receipt of the complaint a physical
verification was carried out and it was revealed
that instead of 226 Engine Assys of TMB 3
TON as mentioned in the tender form, only 222
TMB Engine 3 TON Assys were physically held
at VSD Meerut and four 6.5 TON LPT Engine
Assys were held instead of 3 TON TMB Engine
thereby resulting in the variation in the pricing
of these Engine Assys.
(e) On receipt of complaint, physical
checking was carried out and it was recorded
that 43 Engine Numbers as reflected int he
auction catalogue did not tally with Engine
Nos. on ground which would have caused
problems when the lot lifting was being carried
out, annexed as Annexure R-10.
(f) Central Vehicle Depot forwarded another
Board proceedings duly priced by unit Board of
offrs. for the lots held at VSD Meerut Cantt. for
222 TMB 3 TON Engines & 4 X 6.5 Ton LPT
Engines. The difference in the cost by the unit
pricing Board for the lots included in Tender T-85
opened on 14 June 2000 & the unit pricing
Board received from CVD, vide their letter No.
1064/Eng/Ex. dt. 21 Sept 2000 is
Rs. 21,32,000/-, which is annexed herewith
and marked as Annexure R-11.
(g) That if the Engines had been permitted
to be lifted, it would have caused loss to the
state as wrong engines would have got lifted at
the time of lot lifting due to variation in type
and Nos of the Engines.”
5. The administrative grounds for withdrawal of the said
tender are said to be as under :-
“(a) There was a difference in the 43 engine
Nos. as reflected in the Auction Catalogue and
on physical checking on ground. (Annexure R-10).
(b) 4 Engine Assy of 6.5 Ton TMB had not
been identified properly but were included in
the lots and show as TMB 3 Ton engines.
(c) There was a flaw in the advertisement
published in the Auction journal for T-85
wherein location of the engines was shown as
OD Shakurbasti instead of VSD Meerut. The
type of engines and qtys. were not mentioned
in the advertisement.
(d) The respondent No. 1’s Auction
Catalogue did not reflect the location of these
engines as VSD Meerut for lot No. 392 to 397.
(e) There is a difference of Rs. 21,32,000/-
in the pricing of the above mentioned engines
by the Board of Officers, contained in Auction
Catalogue T-85 and the new Board of officers
Auction Catalogue. The earlier pricing was
22,60,000/- and the now pricing done by new
bd of officer is rupees 43,92,000/- (Annexure
R-11).”
6. Mr. Lekhi, the learned senior counsel appearing on behalf of
the petitioners, would submit that as from the tender
document it would appear the goods were to be sold on “as
is where is” basis, the respondents were liable to follow the
rule of the game. According to the learned counsel, the said
rule is analogous to the rule of playing card in blind. He
would submit that once a right in the said goods became
vested in the petitioners, they could not has been deprived
there from. In support of the said contention, strong
reliance has been placed on Leigh & Sillavan Ltd. v.
Aliakmon Shipping Co. Ltd. , (1985) 2 All ER 44 ; and West Bengal State Electricity
Board v. Patel Engineering Co. Ltd. & Ors., 2001 (1) SCLAE 255.
7. Mr. Maninder Singh, the learned counsel appearing on
behalf of the respondents, on the other hand, would submit
that the action on the part of the respondents cannot be
said to be arbitrary, as notice inviting tender was issued on
a mistaken fact. The learned counsel would contend that in
a situation of this nature, this Court should not exercise its
writ jurisdiction.
8. Mr. Shali, the learned counsel appearing on behalf of
respondent No. 1 would submit that these writ petitions are
not maintainable, as there exists an arbitration clause in
the notice inviting tender.
The learned counsel wold submit that the money, which is
lying with the respondents, would be given back to the
petitioners. According to the learned counsel, in the event
the writ petitions are allowed, the same would amount to
unjust enrichment to the writ petitioners herein.
9. The factual matrix of the matter, as noticed hereinbefore,
clearly depicts that the cause of action for filing the writ
petitions arose out of a contract qua contract and no public
law character is involved in these writ petitions.
It may be true, as has been submitted by Mr. Lekhi, that the
respondents are ‘State’ within the meaning of Article 12 of
the Constitution of India, but the same by itself would not
mean that this Court in exercise of its jurisdiction under
Article 226 of the Constitution of India would enter into a
disputed question of fact or enforce a contract qua contract.
The law in this regard is not in dispute.
10. There cannot be any doubt that Article 14 of the
Constitution of India applies in case of contract entered into
by the between the State and others. However, when the
State enters into transactions pursuant to its commercial
pursuits, its action cannot be said to be a state action
unless public law character is attached to it.
11. The Supreme Court in Life Insurance Corporation of India v.
Escorts Ltd., held that LIC as a shareholder is required to
act as any other shareholder and thus it cannot be
restrained from doing so nor is it bound to disclose its
reasons for moving the resolutions.
12. The Supreme Court further held in Food Corporation of India
v. Jaganath Dutta , .
“We are of the view that the High Court
was not justified in quashing the impugned
notice especially when the terms and
conditions of the contract permitted the
termination of the agreement by either of the
parties. The High Court should not have gone
into the question of contractual obligation in
its writ jurisdiction under Article 226 of the
Constitution. Even otherwise the High Court
misread the documents on the record and
grossly erred in reaching the conclusion that
no policy-decision was taken by the FCI to
terminate the storage agencies in the State of
West Bengal.”
13. In Amarendra Kumar v. State of Bihar , a Division Bench of
Patna High Court, wherein one of us, S.B. Sinha, C.J., was
a member, held :-
“In the case of Burmah Construction Co.
v. State of Orissa ,, delivering the judgment of
the Constitution Bench, Shah, J. stated thus:
“The High Court normally does
not entertain a petition under Article
226 of the Constitution to enforce a
civil liability arising out of a breach of
contract or a tort to pay an amount of
money due to the claimant and leaves
it to the aggrieved party to agitate the
question in a civil suit filed for that
purpose. But an order for payment of
money may sometime be made in a
petition under Article 226 of the
Constitution against the State or
against an officer of the State to
enforce a statutory obligation.’
14. In the case of Suganmal v. State of Madhya Pradesh , the
Court took the view that a petition praying merely for the
issue of a writ of mandamus for refund of tax or any money
due from the State cannot be normally maintained. It was
held (at p.1742 of AIR) :-
‘Normally petitions solely praying for
the refund of money against the State by a
writ of mandamus are not to be entertained.
The aggrieved party has the right of going to
the Civil Court for claiming the amount and it
is open to the State to raise all possible
defenses to the claim, defenses which cannot,
in most cases, be appropriately raised and
considered in the exercise of the writ
jurisdiction.’
See also D.R. Mills v. Commissioner, Civil Supplies , .
15. In Northern India Seeds Corporation v. The State of
Bihar , 1994 (1) BLJR 559 it was noted :-
“45. In Radhakrishna Agarwal v. State
of Bihar, , the Supreme Court categorized the cases
arising out of breaches of alleged obligation by
the State or its agents in three types of cases,
namely:
(i) Where the petitioner
makes a grievance of breach of
promise on the part of the State
in cases where promise has been
made by State and the promises
has acted to his prejudice.
(ii) Where the contract entered
into between the Contracting
Party of the State is in exercise of
statutory power under Statutory
Acts or Rules framed there under.
(iii) Where the contract entered
into between the State and the
persons aggrieved is non-
statutory and purely contractual
of the rights and obligation of the
parties thereto are governed by
the terms of the contract.
The Supreme Court held that whereas
the case falling within the categories (i) and (ii)
aforementioned, a writ petition under Article
226 of the Constitution would be maintainable
but in the cases falling within the category (iii),
no writ petition shall lie.
46. This aspect of the matter has been
considered by a Full Bench of this Court in
Pancham Singh v. State of Bihar, reported
in 1991 (1) PLJR 352 , when this Court upon
taking into consideration various other
decisions of Supreme Court carved out a fourth
category and held that a writ petition shall also
be maintainable where the contract has been
terminated by the ‘State’ on a ground de’ hors
any of the terms of the contract, and which is
per se violative of Article 14 of the Constitution.
….. ….. ….. …..
50. Reference in this connection may be
made to BASF India Ltd. v. The State of
Bihar, 1992 BBCJ 670 . The Division Bench in
that case held:
“We are of the definite opinion
that in all cases where breach of
contract is alleged, the matter
shall have to be decided keeping
in view the law laid down by the
Supreme Court (i.e. the decision
of the Supreme Court in
Radhakrishna Agarwal’s case) .”
53. In Bisra Lime Stone Company Ltd.
v. Orissa State Electricity Board, , the Supreme Court upon
taking into consideration its earlier decision in
Indian Aluminium Company v. Kerala State
Electricity Board, , held that
a writ petition is not maintainable where the
parties can get their disputes resolved by
invoking the adjudicating machinery of the
arbitration clause.”
16. Yet again the Supreme Court recently in Assistant Excise
Commissioner v. Issac Peter , held :-
“We are, therefore, of the opinion that
in case of contracts freely entered into with
the State, like the present ones, there is no
room for invoking the doctrine of fairness and
reasonableness against one party to the
contract (State), for the purpose of altering or
adding to the terms and conditions of the
contract, merely because it happens to be the
State. In such cases, the mutual rights and
liabilities of the parties are governed by the
terms of the contracts (which may be
statutory in some cases) and the laws relating
to contracts. It must be remembered that
these contracts are entered into pursuant to
public auction, floating of tenders or by
negotiation. There is no compulsion on
anyone to enter into these contracts. It is
voluntary on both sides. There can be no
question of the State power being involved in
such contracts. It bears repetition to say that
the State does not guarantee profit to the
licensees in such contracts. There is no
warranty against incurring losses. It is a
business for the licensees. Whether they
make profit or incur loss is no concern of the
State. In law, it entitled to its money under
the contract. It is not as if the licensees are
going to pay more to the State in case they
make substantial profits. We reiterate that
what we have said hereinabove is in the
context of the contracts entered into between
the State and its citizens pursuant to public
auction, floating of tenders or by negotiation.”
17. This aspect of the matter has also been considered in A.C.
Roy Co. and Ors. v. Union of India and Ors. , wherein one of us
S.B. Sinha, C.J. was a member.
18. In State of U.P. and Ors. v. Bridge & Roof Company (India)
Ltd. , the law has been laid down in the following terms :-
“15. In our opinion, the very remedy adopted
by the respondent is misconceived. It is not
entitled to any relief in these proceedings, i.e.,
in the writ petition filed by it. The High Court
appears to be right in not pronouncing upon
any of the several contentions raised in the writ
petition by both the parties and in merely
reiterating the effect of the order of the Deputy
Commissioner made under the proviso to
Section 8-D (1).
16. Firstly, the contract between the parties
is a contract in the realm of private law. It is
not a statutory contract. It is governed by the
provisions of the Contract Act or, maybe, also
by certain provisions of the Sale of Goods Act.
Any dispute relating to interpretation of the
terms and conditions of such a contract cannot
be agitated, and could not have been agitated,
in a writ petition. That is a matter either for
arbitration as provided by the contract or for
the civil court, as the case may be. Whether
any amount is due to the respondent from the
appellant-Government under the contract and,
if so, how much and the further question
whether retention or refusal to pay any amount
by the Government is justified, or not, are all
matters which cannot be agitated in or
adjudicated upon in a writ petition. The prayer
in the writ petition, viz., to restrain the
Government from deducting a particular
amount from the writ petitioner’s bill(s) was not
a prayer which could be granted by the High
Court under Article 226. Indeed, the High
Court has not granted the said prayer.”
19. We, therefore, are of the opinion that these writ petitions are
not maintainable.
20. In Leigh & Sillavan Ltd.’s case (Supra) , the Court of Appeal
was considering a matter relating to passing of property and
sale of goods. The action therein did not arise out of an
action in public law remedy and the Court of Appeal was
concerned with interpretation of a contract. It was also
concerned with the case of negligence and liability of the
Insurance Company.
21. In that view of the matter, the decision of the Apex Court in
W.B. Electricity Board v. Patel Engineering Co. Ltd. & Ors. , (2001) 2 SCC 451
will have no application in the instant case. Therein the
Apex Court was concerned with the interpretation of a
highly competitive international tender and held that in a
case of that nature where the bidders were required to take
all possible case in submitting their tenders, they cannot
later on be permitted to rectify their mistakes which were
impermissible in terms of the tender documents. In the
instant case, the respondents have pleaded mistake of fact.
They had also pleaded mistake in relation to the location
where the properties were situated. In the aforementioned
situation, if the authorities had taken a decision to
withdraw the offer, which would amount to recession of
contract, the remedy of the petitioner would be to file a suit
for damages or take recourse to the Arbitration clause.
22. It is now well known that even a suit for specific
performance of contract would ordinarily not be decreed
when the plaintiff can be compensated in terms of money by
way of damages.
23. For the reasons aforementioned, there is no merit in these
writ petitions, which are dismissed accordingly but without
any order as to costs. However, the petitioners herein can
take refund of the amount deposited by them without
prejudice to their rights and contentions in any future
litigation.