JUDGMENT

HANSARIA, J.:- This appeal is by Union of India and some officers of the Central Government attached to the Ministry of Railways and they have felt aggrieved at the judgment and order passed by a Division Bench of the Calcutta High Court on an appeal preferred by the respondents against the judgment of a learned single Judge which was rendered in a writ petition filed by the respondents under Article 226 of the Constitution.

2. The respondents invoked the extraordinary jurisdiction of the High Court on payments not having been made to them of the different items of stores supplied to the Eastern Railways. The respondents had made a grievance about the non-payment even to the Union Minister of Railways and certain correspondence which took place between the local M.P. and the Railway Minister and between the Additional Private Secretary to the Minister of Railways and Controller of Stores were sought to be relied on in seeking a mandamus for payment of a sum of about rupees half a crore.

3. The learned single Judge took the view that the correspondence in question could not be treated as decision of the President of India as visualised by Article 377 of the Constitution. Being of this view, the writ petitioners were left with the liberty of moving appropriate forum for redressal of their grievances including going in for arbitration as per the contract, leaving all the questions open to be decided in an appropriate forum.

4. By the time the appeal came to be heard by the Division Bench, a development had taken place and the same was issuance of another letter by the aforesaid Additional private Secretary on 8/9-5-91 addressed to General Manager, Eastern Railways, Calcutta, which stated, inter alia, that Minister of Railways had instructed to do as contained in the letter. The Bench took the view that the instructions contained in the aforesaid letter were binding on the General Manager, he being a subordinate authority. The non-carrying out of the instructions by the General Manager was taken to be flouting of the order of the Minister who being the head of the Ministry of Railways was said to be answerable to the House of the People. The Bench also took the view that what was said in the letter was just and proper in the facts and circumstances of the case and was in consonance with views expressed by this Court in Hindustan Sugar Mills v. State of Rajasthan, AIR 1981 SC 1681, wherein it was held by this Court that the Central Government should honour its legal obligation arising even out of contract and not drive a citizen to file suit. It was reiterated in that judgment that in a democratic society governed by the rule of law, it is the duty of the State to do what is fair and just to the citizen and the State should not seek to defeat the legitimate claim of the citizens by adopting a legalistic attitude but should do what fairness and justice demand.

5. The Bench then observed that it was the duty of the General Manager to act fairly, properly and reasonably and the goods having been accepted several years back the Railways had no authority to sit over the matters by folding their hands. Such an attitude was regarded as contrary to rule of law by which a democratic society is governed. The Bench ultimately passed the following operative order :

"The respondents are directed to make payment of the amount stated in the schedule of bills enclosed to the said letter after verification that the bills were complete in all respect subject to the condition that if any goods had been rejected which has already been made from (sic. over) to the petitioner though the reason for rejection had not been communicated, the same should be communicated forthwith. Such steps shall be taken within a period of two months from today."

6. Learned Additional Solicitor General Shri Ahmad appearing for the appellants has advanced two submissions in the main. He first contends that the letter of 8/9-5-91 being not in terms of Article 377 of the